HomeMy WebLinkAboutComprehensive Annual Financial Report - FY2013
CITY OF FRIENDSWOOD, TEXAS
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
YEAR ENDED
SEPTEMBER 30, 2013
Officials Issuing Report:
Roger C. Roecker
City Manager
Cindy S. Edge
Director of Administrative Services
CITY OF FRIENDSWOOD, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
YEAR ENDED SEPTEMBER 30, 2013
C O N T E N T S
Page(s)
INTRODUCTORY SECTION
Letter of Transmittal i-iv
Principal Officials v
GFOA Certificate of Achievement vi
Organizational Chart vii
FINANCIAL SECTION
Independent Auditor's Report 1-3
Management’s Discussion and Analysis (Unaudited) 4-14
Basic Financial Statements
Government-wide Financial Statements
Statement of Net Position 15
Statement of Activities 16
Fund Financial Statements
Governmental Funds
Balance Sheet 17
Reconciliation of the Governmental Funds Balance Sheet to
the Statement of Net Position 18
Statement of Revenues, Expenditures and Changes in Fund Balances 19
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the Statement
of Activities 20
Proprietary Funds
Statement of Net Position 21-22
Statement of Revenues, Expenses and Changes in Fund Net Position 23
Statement of Cash Flows 24-25
Notes to Basic Financial Statements 26-58
Required Supplementary Information
Schedule of Funding Progress for Participation in
Texas Municipal Retirement System 59
Schedule of Funding Progress – Post Employment Benefits Plan Other
Than Pensions 60
Schedule of Revenues, Expenditures, and Changes in Fund Balance
Budget and Actual – General Fund 61-67
Notes to Required Supplementary Information 68-70
Combining and Individual Fund Statements and Schedules
Non-major Governmental Funds 71
Combining Balance Sheet 72
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances 73
CITY OF FRIENDSWOOD, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
YEAR ENDED SEPTEMBER 30, 2013
C O N T E N T S – CONTINUED
Page(s)
Combining and Individual Fund Statements and Schedules – Continued
Schedule of Revenues, Expenditures and Changes in Fund Balance –
Budget and Actual
Fire/EMS Donation Fund 74
Debt Service Fund 75
STATISTICAL SECTION (Unaudited) Table Page(s)
Financial Trends
Net Position by Component 1 76
Changes in Net Position 2 77-78
Fund Balances, Governmental Funds 3 79
Changes in Fund Balances, Governmental Funds 4 80
Revenue Capacity
Assessed Value and Taxable Value of Property 5 81
Direct and Overlapping Property Tax Rates 6 82
Principal Property Tax Payers 7 83
Property Tax Levies and Collections 8 84
Debt Capacity
Ratios of Outstanding Debt by Type 9 85
Ratios of Net General Bonded Debt Outstanding 10 86
Direct and Overlapping Governmental Activities Debt 11 87
Legal Debt Margin Information 12 88
Pledged-Revenue Coverage 13 89
Demographic and Economic Information
Demographic and Economic Statistics 14 90
Principal Employers 15 91
Operating Information
Full-Time Equivalent City Government Employees
by Function/Program 16 92
Operating Indicators by Function/Program 17 93
Capital Asset Statistics by Function/Program 18 94
INTRODUCTORY SECTION
ii
iii
iv
v
CITY OF FRIENDSWOOD, TEXAS
PRINCIPAL OFFICIALS AS OF
SEPTEMBER 30, 2013
Elected Officials Position Term Expires
Kevin M. Holland Mayor May-15
Steve Rockey Council Member - Position No. 1 May-15
Billy J. Enochs Council Member - Position No. 2 May-14
Jim Hill Council Member - Position No. 3 May-15
Patrick J. McGinnis, MD Council Member - Position No. 4 May-16
John H. Scott Council Member - Position No. 5 May-14
Carl W. Gustafson Council Member - Position No. 6 May-16
Key Staff Position
Roger C. Roecker City Manager
Morad Kabiri Assistant City Manager
Cindy S. Edge Director of Administrative Services
Terry Byrd Fire Marshal
Kazem Hamidian Public Works Director
Melinda Welsh City Secretary
James Toney Community Services Director
Robert B. Weiners Police Chief
Ross, Banks, May, Cron & Cavin, P.C. City Attorney
James W. Woltz Judge - Municipal Court
vi
vii
CITY OF FRIENDSWOOD
ORGANIZATIONAL CHART
FINANCIAL SECTION
AN INDEPENDENT MEMBER OF
BAKER TILLY INTERNATIONAL
WEAVER AND TIDWELL, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS
24 GREENWAY PLAZA, SUITE 1800, HOUSTON, TX 77046
P: 713.850.8787 F: 713.850.1673
INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor,
City Council and City Manager
City of Friendswood, Texas
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the
business-type activities, the discretely presented component unit, each major fund, and the
aggregate remaining fund information of the City of Friendswood, Texas (the City) as of and for
the year ended September 30, 2013, and the related notes to the financial statements, which
collectively comprise the City’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with accounting principles generally accepted in the United States of
America; this includes the design, implementation, and maintenance of internal control relevant
to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
did not audit the financial statements of the West Ranch Management District, a discretely
presented component unit of the City. Those statements were audited by other auditors whose
report has been furnished to us, and our opinion, insofar as it relates to the amounts included
for the West Ranch Management District, is based solely on the report of the other auditors. We
conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatement. The financial statements of the West
Ranch Management District were not audited in accordance with Governmental Auditing
Standards.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
To the Honorable Mayor,
City Council and City Manager
City of Friendswood, Texas
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We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, the business-type activities, the
discretely presented component unit, each major fund, and the aggregate remaining fund
information of the City as of September 30, 2013, and the respective changes in financial
position, and, where applicable, cash flows thereof for the year then ended in accordance with
accounting principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis (on pages 4 through 14), the Schedule of Funding
Progress for Participation in Texas Municipal Retirement System (on page 59), the Schedule of
Funding Progress – Post Employment Benefits Other Than Pensions (on page 60), and the
Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual –
General Fund (on pages 61 through 67) be presented to supplement the basic financial
statements. Such information, although not a part of the basic financial statements, is required
by the Governmental Accounting Standards Board, who considers it to be an essential part of
financial reporting for placing the basic financial statements in an appropriate operational,
economic, or historical context. We have applied certain limited procedures to the required
supplementary information in accordance with auditing standards generally accepted in the
United States of America, which consisted of inquiries of management about the methods of
preparing the information and comparing the information for consistency with management’s
responses to our inquiries, the basic financial statements, and other knowledge we obtained
during our audit of the basic financial statements. We do not express an opinion or provide any
assurance on the information because the limited procedures do not provide us with sufficient
evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City’s basic financial statements. The introductory section, combining
and individual nonmajor fund financial statements, and statistical section are presented for
purposes of additional analysis and are not a required part of the basic financial statements.
The combining and individual nonmajor fund financial statements are the responsibility of
management and were derived from and relate directly to the underlying accounting and other
records used to prepare the basic financial statements. Such information has been subjected to
To the Honorable Mayor,
City Council and City Manager
City of Friendswood, Texas
3
the auditing procedures applied in the audit of the basic financial statements and certain
additional procedures, including comparing and reconciling such information directly to the
underlying accounting and other records used to prepare the basic financial statements or to the
basic financial statements themselves, and other additional procedures in accordance with
auditing standards generally accepted in the United States of America. In our opinion, the
combining and individual nonmajor fund financial statements are fairly stated, in all material
respects, in relation to the basic financial statements as a whole.
The introductory and statistical sections have not been subjected to the auditing procedures
applied in the audit of the basic financial statements and, accordingly, we do not express an
opinion or provide any assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
February 28, 2014, on our consideration of the City’s internal control over financial reporting and
on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant
agreements and other matters. The purpose of that report is to describe the scope of our
testing of internal control over financial reporting and compliance and the results of that testing,
and not to provide an opinion on internal control over financial reporting or on compliance. That
report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the City’s internal control over financial reporting and compliance.
WEAVER AND TIDWELL, L.L.P.
Houston, Texas
February 28, 2014
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Management’s Discussion and Analysis
(Unaudited)
As management of the City of Friendswood (the “City”), we offer readers of the City’s financial
statements this narrative overview and analysis of the financial activities of the City of
Friendswood for the fiscal year ended September 30, 2013. Please read this information in
conjunction with the basic financial statements that follow this section. The discussion and
analysis includes comparative data for 2012.
FINANCIAL HIGHLIGHTS
Some of the City’s financial highlights for the fiscal year ending September 30, 2013 include:
The assets of the City exceeded its liabilities at the close of the most recent fiscal year
by $115,268,473.
The City’s total net position increased during the year by $546,468.
Unrestricted net position is $26,355,589.
Program revenues of $15,039,737 reduced the net cost of the City’s functions to be
financed from the City’s general revenues to $20,270,854.
OVERVIEW OF THE FINANCIAL STATEMENTS
Components of the Financial Section
Summary Detail
5
This discussion and analysis is intended to serve as an introduction to the City’s basic
financial statements. The basic financial statements are comprised of three components:
1) government-wide financial statements, 2) fund financial statements, and 3) notes to the
financial statements. This report also includes supplementary information intended to furnish
additional detail to support the basic financial statements themselves.
Government-wide Financial Statements
The government-wide financial statements report information for the City as a whole. These
statements included transactions and balances relating to all assets, including infrastructure
capital assets. These statements are designed to provide information about cost of services,
operating results, and financial position of the City as an economic entity. The Statement of Net
Position and the Statement of Activities, which appear first in the City’s financial statements,
report information on the City’s activities that enable the reader to understand the financial
condition of the City. These statements are prepared using the accrual basis of accounting,
which is similar to the accounting used by most private-sector companies. All of the current
year’s revenues and expenses are taken into account even if cash has not yet changed hands.
The Statement of Net Position presents information on all of the City’s assets and liabilities with the
difference reported as net position. Over time, increases or decreases in net position may serve as
a useful indicator of whether the financial position of the City is improving or deteriorating. Other
non-financial factors, such as the City’s property tax base and the condition of the City’s
infrastructure, need to be considered in order to assess the overall health of the City.
The Statement of Activities presents information showing how the City’s net position changed
during the most recent fiscal year. All changes in net position are reported as soon as the
underlying event giving rise to the change occurs, regardless of the timing of related cash flows –
the accrual method rather than modified accrual that is used in the fund level statements.
Both of the government-wide financial statements distinguish functions of the City that are
principally supported by taxes and intergovernmental revenues (governmental activities) from
functions that are intended to recover all or a significant portion of their costs through user fees
(business-type activities).
Governmental activities – Most of the City’s basic services are reported here including
general government (mayor and council, city secretary, city manager, and administrative
services); public safety (police, volunteer fire department and fire marshal); public works
(streets and drainage); community development (engineering, building inspection and
planning zoning); community services (parks, facility operations and community activities)
and library. Interest payments on the City’s debt are also reported here. Property tax,
sales tax, franchise taxes, municipal court fines and permit fees finance most of the
activities.
Business-type activities – Services involving a fee for those services, which include the
City’s water and sewer system are reported here.
Component Unit activities include activities of The West Ranch Management District.
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Fund Financial Statements
A fund is a self-balancing set of accounts that is used to maintain control over resources that
have been segregated for specific activities or objectives. The City uses fund accounting to
ensure and demonstrate compliance with finance-related legal requirements. The City uses two
fund types – governmental and proprietary.
Governmental funds
Governmental funds are used to account for essentially the same functions reported as
governmental activities in the government-wide financial statements with the exclusion of internal
service fund activity. However, unlike the government-wide financial statements, governmental
funds focus on near-term inflows and outflows of spendable resources, as well as on balances of
spendable resources available at the end of the fiscal year. Such information may be useful in
evaluating the City’s near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By
doing so, the reader may better understand the long-term impact of the government’s
near-term financing decisions. Both the governmental fund balance sheet and the governmental
statement of revenues, expenditures, and changes in fund balances provide a reconciliation to
facilitate this comparison between governmental funds and governmental activities.
The City maintains ten governmental funds. Information is presented separately in the
governmental funds balance sheet and the governmental fund statement of revenues,
expenditures, and changes in fund balances for the General Fund which is considered to be a
major fund. Management has elected to present the debt service fund as a major fund with
singular presentation rather than aggregated with the other non-major funds. The other eight
funds are combined into a single, aggregated presentation. Individual fund data for each of
these non-major governmental funds is provided in the form of combining statements found in
this report.
Proprietary funds
The City maintains two types of proprietary funds: enterprise and internal service funds.
Enterprise funds are used to report the same functions presented as business-type activities in
the government-wide financial statements. The City uses an enterprise fund to account for its
operation in water distribution and wastewater collection/treatment along with its water and
wastewater impact fees, and water construction projects. Management would note that trash
collection services are provided by a third party contract.
Internal service funds are an accounting device used to accumulate and allocate costs internally
among the City’s various functions. The City uses an internal service fund to account for fleet
management services. Because these services predominantly benefit governmental rather than
business-type functions, they have been included within the governmental activities in the
government-wide financial statements.
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Notes to the Financial Statements
The notes to the financial statements provide additional information that is essential to a full
understanding of the data provided in the government-wide and fund financial statements. The
notes are the last section of the basic financial statements.
Other Information
In addition to the basic financial statements and accompanying notes, this report also presents
certain Required Supplementary Information (RSI). The RSI includes schedules of funding
progress for the Texas Municipal Retirement System and the City’s other post-employment
healthcare benefits. The City adopts an annual appropriated budget for its general fund. A
budgetary comparison schedule has been provided in RSI to demonstrate compliance with this
budget. RSI can be found after the basic financial statements.
The combining and individual fund statements and schedules that further support the information
in the financial statements are presented immediately following the notes to the required
supplementary information.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
Statement of Net Position
The following table reflects the condensed Statement of Net Position:
CONDENSED STATEMENT OF NET POSITION
2013 2012 2013 2012 2013 2012
Current and other assets 14,263,045$ 14,265,582$ 20,158,255$ 20,066,228$ 34,421,300$ 34,331,810$
Capital assets 86,127,831 87,670,295 55,861,351 54,989,386 141,989,182 142,659,681
Total Assets 100,390,876 101,935,877 76,019,606 75,055,614 176,410,482 176,991,491
Long-term liabilities 21,614,799 23,181,645 31,838,747 32,993,350 53,453,546 56,174,995
Other liabilities 3,436,216 3,470,448 4,252,247 2,624,043 7,688,463 6,094,491
Total Liabilities 25,051,015 26,652,093 36,090,994 35,617,393 61,142,009 62,269,486
Net Position:
Net investment in
capital assets 65,056,180 65,582,783 22,961,547 25,618,823 88,017,727 91,201,606
Restricted 718,275 872,869 176,882 786,600 895,157 1,659,469
Unrestricted 9,565,406 8,828,132 16,790,183 13,032,798 26,355,589 21,860,930
Total Net Position 75,339,861$ 75,283,784$ 39,928,612$ 39,438,221$ 115,268,473$ 114,722,005$
Governmental Activities Business-type Activities Totals
As noted earlier, net position may serve over time as a useful indicator of a government’s
financial position. For the City of Friendswood, assets exceeded liabilities by $115.3 million as
of September 30, 2013 in the primary government, which is an increase in the City’s overall
financial position compared to the prior year.
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The largest portion of the City’s net position (76.4 percent) reflects its investments in capital
assets (e.g., land, buildings and improvements, machinery and equipment, infrastructure, water
and sewer system, construction in progress and water rights); less any debt outstanding used to
acquire those assets. The City uses these capital assets to provide services to citizens;
consequently these assets are not available for future spending. Although the City’s investment
in its capital assets is reported net of related debt, it should be noted that the resources needed
to repay this debt must be provided from other sources, since the assets themselves cannot be
used to liquidate these liabilities.
A portion of the primary government’s net position, $895,157 or 0.8 percent, represents
resources that are subject to external restriction on how they may be used. These restrictions
include monies accounted for in special revenue funds for which the use is legally restricted,
monies restricted for debt service, and capital project funds that represent unspent bond
proceeds at the fund level. The remaining balance of unrestricted net position, $26,355,589 or
22.8 percent, may be used to meet the City’s ongoing obligations to citizens and creditors.
Change in Net Position
The following table provides a summary of the City’s changes in net position:
CHANGES IN NET POSITION
2013 2012 2013 2012 2013 2012
Revenues:
Program revenues:
Charges for services 2,388,737$ 2,419,836$ 11,462,779$ 11,258,216$ 13,851,516$ 13,678,052$
Operating grants
and contributions 644,458 648,058 - - 644,458 648,058
Capital grants
and contributions 543,763 527,288 - - 543,763 527,288
General revenues:
Property taxes 14,630,961 14,165,599 - - 14,630,961 14,165,599
Sales taxes 4,293,794 3,907,577 - - 4,293,794 3,907,577
Franchise taxes 1,583,258 1,556,556 - - 1,583,258 1,556,556
Other taxes 24,974 23,356 - - 24,974 23,356
Investment earnings 88,510 137,202 37,565 82,853 126,075 220,055
Miscellaneous 122,470 165,058 35,790 7,000 158,260 172,058
Total revenues 24,320,925 23,550,530 11,536,134 11,348,069 35,857,059 34,898,599
Expenses:
General government 4,679,339 4,737,702 - - 4,679,339 4,737,702
Public safety 10,800,130 10,736,805 - - 10,800,130 10,736,805
Public Works 4,385,090 3,738,111 - - 4,385,090 3,738,111
Community development 1,207,264 1,520,401 - - 1,207,264 1,520,401
Community services 3,260,931 3,227,731 - - 3,260,931 3,227,731
Library 1,002,801 1,004,303 - - 1,002,801 1,004,303
Water and sewer - - 7,681,366 6,902,279 7,681,366 6,902,279
Interest on long-term
debt 703,275 757,011 1,590,395 1,638,495 2,293,670 2,395,506
Total expenses 26,038,830 25,722,064 9,271,761 8,540,774 35,310,591 34,262,838
Increases/(Decrease) in net position
before transfers (1,717,905) (2,171,534) 2,264,373 2,807,295 546,468 635,761
Transfers 1,773,982 1,725,141 (1,773,982) (1,725,141) - -
Change in net position 56,077 (446,393) 490,391 1,082,154 546,468 635,761
Net position, beginning 75,283,784 75,730,177 39,438,221 38,356,067 114,722,005 114,086,244
Net position, ending 75,339,861$ 75,283,784$ 39,928,612$ 39,438,221$ 115,268,473$ 114,722,005$
Governmental Activities Business-type Activities Totals
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Governmental Activities
Governmental activities increased the City of Friendswood’s net position by $56,077. Key
elements of this change are as follows:
Property sales taxes continue to be the City’s largest revenue sources. Property tax
revenue increased by $465,362 due to new property added to the roll in the current fiscal
year.
Sales tax revenue has rebounded during fiscal year 2013, providing a 10 percent
increase from $3.9 million to $4.3 million.
Total expenses increased $316,766 from prior year. The largest increase was in Public
Works ($646,979) primarily due to an increase in street maintenance in the current year.
Governmental Activities – Revenues
Charges for
Services
9.82%
Operating
Grants &
Contributions
2.65%
Capital Grants
& Contributions
2.24%
Property Taxes
60.16%
Sales
Taxes
17.65%
Franchise
Taxes
6.51%
Miscellaneous
0.97%
Governmental Activities – Expenses
General
Government
18%
Public Safety
41%
Public
Works
17%
Community
Development
5%
Community
Services
12%
Library
4%
Interest on
Long‐Term
Debt
3%
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Business Type Activities
Business type activities increased the City of Friendswood’s net position by $490,391. Key
elements of this change are as follows:
Operating revenue increased by $204,563 or 1.8 percent. Water and sewer revenue
remained fairly consistent while impact fees increased approximately 6.78 percent due
to new home development.
Operating expenses increased $779,087 or 11.3 percent. Expenses related to water
operations increased 7.39 percent and expenses related to sewer operations increased
17.33 percent. During fiscal year 2014, a “Cost of Service and Rate Study” will be
performed. The results of the study will determine if current water and sewer rates are
sufficient to support current operational and infrastructure needs.
FINANCIAL ANALYSIS OF THE CITY’S FUNDS
As noted earlier, fund accounting is used to demonstrate and ensure compliance with finance-
related legal requirements.
Governmental Funds
The focus of the City’s governmental funds is to provide information on near-term inflows,
outflows and balances of spendable resources. Such information is useful in assessing the
City’s financing requirements. In particular, unassigned fund balance may serve as a useful
measure of the City’s net resources available for spending at the end of the year.
At the end of the current fiscal year, the City’s governmental funds reported combined ending
fund balances of $11,632,566. Approximately 83.5 percent of this amount ($9,714,206) is
unassigned fund balance; however, $5.3 million is set aside for the 90-day operating reserve, as
set forth in the City’s financial policies. The remaining $1,918,360 is nonspendable, restricted or
assigned as follows:
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Nonspendable (1.3 percent)
Prepaid items $122,927
Permanent fund 31,137
Restricted (11.0 percent)
Authorized construction $262,642
State and/or federal statutes 348,757
Fire/EMS Donations 75,742
City ordinances 128,300
Debt Service 179,828
Public education and
government channels 281,826
Assigned (4.2 percent)
Encumbrances $487,201
The general fund is the chief operating fund of the City of Friendswood. At the end of the
current fiscal year, unassigned fund balance of the general fund was $9.7 million, while the total
fund balance reached $10.6 million. As a measure of the general fund’s liquidity, it may be
useful to compare both unassigned and total fund balance to total fund expenditures.
Unassigned fund balance represents 44.82 percent of total general fund expenditures, while
total fund balance represents 48.94 percent of that same amount. At year end, the City’s
operating reserve was $5.3 million, representing 25 percent of total general fund expenditures.
Key differences between last year’s general fund activity and this year’s include:
$920,681 increase in total revenues – new homes added to the property tax roll
increased property taxes and improved economic conditions increased sales tax.
$701,844 decrease in total expenditures – completed capital projects in prior year
resulted in decrease in capital outlay.
$316,952 decrease in capital lease proceeds – purchase of new fire truck in prior
year.
Fund balance in the Debt Service Fund decreased $65,924. This decrease was planned during
the budget process as debt service payments would exceed property tax collections.
Proprietary Funds
The City’s proprietary funds financial statements provide the same type of information found in
the government-wide financial statements, but in more detail.
At the end of the year, unrestricted net position was $16,790,183 for the Water and Sewer fund.
The total increase in the net position of the water and sewer fund was $490,391. Other factors
concerning the finances of this fund have already been addressed in the discussion of the City
of Friendswood’s business-type activities.
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Unrestricted net position of the Internal Service Fund was $339,566. The net position of the
internal service fund increased by $15,160 primarily as a result of $16,222 in gains recognized
on sales of capital assets.
GENERAL FUND BUDGETARY HIGHLIGHTS
The City made revisions to the original appropriations approved by the City Council. Budgeted
revenues increased by $186,806 or 1 percent and expenditures were increased by $939,053 or
4.2 percent.
Total revenues were above budget by $881,561. The more significant variances are detailed
below:
$238,629 above budget in property taxes as a result of more new construction and
higher tax values than anticipated.
$384,755 above budget in sales taxes due to improved economic conditions.
$109,096 under budget in fines and forfeitures due to fewer class C misdemeanor
violations.
$171,319 above budget in permits and fees due to greater than anticipated housing
development.
Total expenditures of the General Fund were $1,538,347 below the final expenditure budget.
The more significant variances are detailed below:
$452,390 below budget in total general government expenditures primarily a result of
decrease in other services and charges (legal, appraisal services, consulting, etc.).
$275,893 below budget in total public safety expenditures due to vacancies in personnel.
$550,417 below budget in community services expenditures due to vacancies in
personnel in the parks department and lower electricity costs in building operations.
CAPITAL ASSETS
The City of Friendswood’s investment in capital assets (net of accumulated depreciation) for its
governmental and business-type activities as of September 30, 2013 is $141,989,182. The
investment in capital assets includes land, buildings and improvements, machinery and
equipment, infrastructure, water and sewer system, water rights and construction in progress.
Major capital events during the year included the following:
Completion of renovations to Fire Station #3. Total project cost was $345,807.
Completion of improvements to Blackhawk, Oak Vista and Wandering Trail
roadways. Total project cost was approximately $3.4 million.
Completion of improvements to Surface Water Plant #2. Total cost of the project
was approximately $1.4 million.
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The following water and sewer projects are in construction in progress at the end of
fiscal year 2013: Blackhawk Water Plant Rehabilitation ($1.7 million) Water Plant #2
Replacement ($78,000), Water Plant #7 Rehabilitation ($136,000), Water Plant #5
Rehabilitation ($3.3 million) and Lift Station #6 ($414,000).
CITY OF FRIENDSWOOD’S CAPITAL ASSETS AT YEAR-END
2013 2012 2013 2012 2013 2012
Land 24,007,398$ 24,007,398$ 716,818$ 716,818$ 24,724,216$ 24,724,216$
Buildings and
improvements 24,055,022 21,684,276 - - 24,055,022 21,684,276
Equipment 7,995,263 8,160,545 403,053 426,569 8,398,316 8,587,114
Infrastructure 29,043,415 30,540,783 29,389,193 29,386,863 58,432,608 59,927,646
Water rights - - 19,716,695 19,716,695 19,716,695 19,716,695
Construction in progress 1,026,733 3,277,293 5,635,592 4,742,441 6,662,325 8,019,734
Total capital assets 86,127,831$ 87,670,295$ 55,861,351$ 54,989,386$ 141,989,182$ 142,659,681$
Governmental Activities Business-type Activities Totals
More detailed information on the City’s capital assets is presented in Note 4 to the financial
statements.
DEBT ADMINISTRATION
At the end of the current fiscal year, the City of Friendswood had a total bonded debt and capital
lease obligation of $54,101,981.
CITY OF FRIENDSWOOD’S OUTSTANDING DEBT AT YEAR-END
2013 2012 2013 2012 2013 2012
General obligations 20,230,000$ 21,605,000$ -$ -$ 20,230,000$ 21,605,000$
Revenue bonds payable - - 32,995,000 34,115,000 32,995,000 34,115,000
Certificates of obligation - - - - - -
Capital leases 876,981 975,726 - - 876,981 975,726
21,106,981$ 22,580,726$ 32,995,000$ 34,115,000$ 54,101,981$ 56,695,726$
Governmental Activities Business-type Activities Totals
The City’s General Obligation and Revenue Bonds bond ratings are listed below:
Standard
& Poor's
General Obligation Bonds AA-
Revenue Bonds AA-
More detailed information about the City’s outstanding debt can be found in Note 6 to the
financial statements.
14
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
Friendswood continues to experience moderate growth. The City’s current population is
estimated to be 38,369. Friendswood is expected to reach build out with an estimated
population of 57,000. The City is continuing to focus on Economic Development initiatives,
including the revitalization of downtown and a large residential and commercial development
called West Ranch. The West Ranch residential development is currently under way, with
commercial construction scheduled to follow as the area’s residential population grows.
The City’s largest single source of revenue in the General Fund continues to be ad valorem
taxes. The tax rate was decreased .0056 cents from $.5970 to $.5914. This rate consists of a
maintenance and operations (M&0) tax rate of $.5303 and an interest and sinking (debt service)
tax rate of $.0611. The rate was set based on a net assessed value of $2,502,557,278. This is
an increase of $67,450,451 from certified taxable values including supplemental rolls for tax
year 2012 in taxable value. This increase is a result of new construction in the City. This
additional value results in a total levy increase of $370,246. The City’s financial management
policy sets the guideline to maintain the fund balance and retained earnings of the various
operating funds at levels sufficient to protect the City’s creditworthiness as well as its financial
position from unforeseeable emergencies.
The City’s second largest source of revenue in the General Fund is Sales Tax. The City
anticipates an increase in this revenue stream from the prior year and has adjusted the budget
from $3,908,681 to $4,127,080. The franchise fees budget has been increased from
$1,496,561 to $1,529,086 and the budget for municipal court fines has been decreased from
$1,013,532 to $921,406. If all projections are accurate, the total General Fund unassigned fund
balance net of the 90 day operating requirement ($5.3 million) is estimated to be approximately
$2.3 million at September 30, 2014.
Water revenues are budgeted at $5,307,550 which is an increase of $37,550 in revenues, or
0.71 percent. Sewer revenues are budgeted at $3,750,412. Water and sewer retained
earnings net of the 90 operating requirement ($1.9 million) is expected to be $7.1 million at the
end of fiscal year 2014.
Pursuant to the City’s financial management policy, funds in excess of the 90-day operating
reserve are designated for future capital improvements.
CONTACTING THE CITY’S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, customers, investors, and creditors with
a general overview of the City’s finances and to show the City’s accountability for the money it
receives. If you have questions about this report or need additional information, contact
Administrative Services, P. O. Box 1288, Friendswood, Texas 77549-1288, or call Cindy S.
Edge at 281-996-3224, or email cedge@friendswood.com.
Separately issued financial statements for the West Ranch Management District can be
obtained by writing to: West Ranch Management District, a Component Unit of the City of
Friendswood, c/o Allen Boone Humphries Robinson LLP, 3200 Southwest Freeway, Suite 2600,
Houston, Texas 77027.
BASIC FINANCIAL STATEMENTS
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF NET POSITION
SEPTEMBER 30, 2013
The Notes to the Basic Financial Statements
are an integral part of these statements.
15
Primary Government
Governmental Business-type Component
Activities Activities Total Unit
ASSETS
Cash and investments 12,319,289$ 12,590,805$ 24,910,094$ 2,140,964$
Receivables (net of allowances for uncollectibles)
Taxes 1,532,842 - 1,532,842 71,433
Customer accounts 212,850 1,976,771 2,189,621 -
Other 195,027 64,566 259,593 27,641
Internal balances (900,000) 900,000 - -
Due from other governments 507,656 - 507,656 -
Prepaid items 122,927 32,709 155,636 4,445
Working capital deposit - 288,862 288,862 -
Deferred charges 272,454 373,147 645,601 931,214
Restricted cash and investments - 3,931,395 3,931,395 -
Capital assets
Land 24,007,398 716,818 24,724,216 5,848,357
Buildings and improvements 38,447,558 - 38,447,558 -
Machinery and equipment 16,247,829 3,051,452 19,299,281 -
Infrastructure 67,671,399 - 67,671,399 483,467
Water and sewer system - 56,556,570 56,556,570 -
Construction in progress 1,026,733 5,635,592 6,662,325 -
Water rights - 19,716,695 19,716,695 -
Accumulated depreciation (61,273,086) (29,815,776) (91,088,862) (30,575)
Total capital assets, net 86,127,831 55,861,351 141,989,182 6,301,249
Total assets 100,390,876 76,019,606 176,410,482 9,476,946
LIABILITIES
Accounts payable 522,686 2,406,348 2,929,034 15,033
Accrued liabilities 995,420 200,506 1,195,926 -
Accrued interest 79,902 127,250 207,152 259,295
Customer deposits - 350,737 350,737 -
Noncurrent liabilities:
Due within one year 1,838,208 1,167,406 3,005,614 225,000
Due in more than one year 21,614,799 31,838,747 53,453,546 14,145,648
Total liabilities 25,051,015 36,090,994 61,142,009 14,644,976
NET POSITION
Net investment in capital assets 65,056,180 22,961,547 88,017,727 -
Restricted for:
Debt service 134,339 - 134,339 540,283
Public safety 424,499 - 424,499 -
Community development
Expendable 128,300 - 128,300 -
Nonexpendable 31,137 - 31,137 -
Capital improvements - 176,882 176,882 6,036
Unrestricted 9,565,406 16,790,183 26,355,589 (5,714,349)
Total net position 75,339,861$ 39,928,612$ 115,268,473$ (5,168,030)$
CITY OF FRIENDSWOOD, TEXAS STATEMENT OF ACTIVITIES YEAR ENDED SEPTEMBER 30, 2013 The Notes to the Basic Financial Statements are an integral part of these statements. 16 Program RevenuesOperating Capital Primary GovernmentCharges for Grants and Grants and Governmental Business - Type ComponentProgram Activities Expenses Services Contributions Contributions Activities Activities Total UnitPrimary governmentGovernmental activitiesGeneral government 4,679,339$ 989,190$ - $ - $ (3,690,149)$ - $ (3,690,149)$ - $ Public safety 10,800,130 34,944 545,635 543,763 (9,675,788) - (9,675,788) - Public works 4,385,090 186,504 - - (4,198,586) - (4,198,586) - Community development 1,207,264 825,366 - - (381,898) - (381,898) - Community services 3,260,931 316,047 97,376 - (2,847,508) - (2,847,508) - Library 1,002,801 36,686 1,447 - (964,668) - (964,668) - Interest on long-term debt 703,275 - - - (703,275) - (703,275) - Total governmental activities 26,038,830 2,388,737 644,458 543,763 (22,461,872) - (22,461,872) - Business-type activitiesWater and sewer 9,271,761 11,462,779 - - - 2,191,018 2,191,018 - Total business-type activities 9,271,761 11,462,779 - - - 2,191,018 2,191,018 - Total primary government 35,310,591$ 13,851,516$ 644,458$ 543,763$ (22,461,872) 2,191,018 (20,270,854) - Component unitWest Ranch Management District 1,417,279 - - - - - - (1,417,279) 1,417,279$ - $ - $ - $ - - - (1,417,279) GENERAL REVENUESTaxes:Property taxes, levied for general purposes 13,009,415 - 13,009,415 1,076,765 Property taxes, levied for debt service 1,621,546 - 1,621,546 - Sales taxes4,293,794 - 4,293,794 - Franchise taxes 1,583,258 - 1,583,258 - Other taxes24,974 - 24,974 - Penalties and interest - - - 34,945 Interest on investments 88,510 37,565 126,075 3,983 Gain on sale of capital assets 43,788 - 43,788 - Miscellaneous78,682 35,790 114,472 9 TRANSFERS1,773,982 (1,773,982) - - Total general revenues and transfers 22,517,949 (1,700,627) 20,817,322 1,115,702 Change in net position 56,077 490,391 546,468 (301,577) NET POSITION, beginning of year75,283,784 39,438,221 114,722,005 (4,866,453) NET POSITION, end of year75,339,861$ 39,928,612$ 115,268,473$ (5,168,030)$ Changes in Net PositionNet (Expense) Revenue and
CITY OF FRIENDSWOOD, TEXAS
BALANCE SHEET – GOVERNMENTAL FUNDS
SEPTEMBER 30, 2013
The Notes to the Basic Financial Statements
are an integral part of these statements.
17
Other Total
General Debt Governmental Governmental
Fund Service Funds Funds
Cash and investments 8,973,154$ 179,560$ 2,827,260$ 11,979,974$
Receivables, net of allowance
Taxes 1,498,430 34,412 - 1,532,842
Customer accounts 181,579 - 31,271 212,850
Other 189,482 269 5,025 194,776
Due from other funds 1,495,557 - - 1,495,557
Receivable from other governments 62,490 - 445,166 507,656
Prepaids and other assets 122,927 - - 122,927
Total assets 12,523,619$ 214,241$ 3,308,722$ 16,046,582$
Liabilities
Accounts payable 460,949$ -$ 61,737$ 522,686$
Accrued liabilities 995,137 - 283 995,420
Due to other funds - - 2,395,557 2,395,557
Unearned revenue 461,373 34,413 4,567 500,353
Total liabilities 1,917,459 34,413 2,462,144 4,414,016
Fund Balances
Nonspendable
Prepaid items 122,927 - - 122,927
Permanent fund - - 31,137 31,137
Restricted for
Public education and
government channels 281,826 - - 281,826
Debt service - 179,828 - 179,828
Authorized construction - - 262,642 262,642
State and/or federal statute - - 348,757 348,757
Fire/EMS donations - - 75,742 75,742
City ordinances - - 128,300 128,300
Assigned 487,201 - - 487,201
Unassigned 9,714,206 - - 9,714,206
Total fund balances 10,606,160 179,828 846,578 11,632,566
Total liabilities and fund balances 12,523,619$ 214,241$ 3,308,722$ 16,046,582$
ASSETS
LIABILITIES AND FUND BALANCES
CITY OF FRIENDSWOOD, TEXAS
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION
SEPTEMBER 30, 2013
The Notes to the Basic Financial Statements
are an integral part of these statements.
18
Total fund balances - governmental funds 11,632,566$
85,192,922
272,454
(1,324,434)
(79,902)
1,274,475
500,353
Bonds payable (20,230,000)$
Deferred loss on refunding 509,981
Premiums on issuance (737,293)
Capital leases payable (876,981)
Compensated absences (794,280) (22,128,573)
Net position of governmental activities 75,339,861$
Revenues earned but not available within sixty days of the year end are
not recognized as revenue on the fund financial statements.
funds balance sheet.
resources; therefore, it is not reported as a liability in the governmental
Interest payable on long term debt does not require current financial
governmental activities in the statement of net position.
assets and liabilities of the internal service fund are included in the
certain activities, such as fleet management, to individual funds. The
An internal service fund is used by management to charge the cost of
amortized over the life of the debt in the government-wide financial
expensed when incurred in the fund statements and capitalized and
Costs associated with the issuance of governmental long term debt are
therefore not recorded in the governmental fund financial statements.
obligation do not require the use of current financial resources and are
The accruals for net other post employment benefits and net pension
These long-term liabilities at year end consists of:
period and therefore are not reported in the fund financial statements.
and compensated absences are not due and payable in the current
Long-term liabilities, including bonds payable, capital leases payable,
position are different because:
Amounts reported for governmental activities in the statement of net
balance sheet.
resources and therefore are not reported in the governmental funds
Capital assets used in governmental activities are not current financial
statements.
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCES – GOVERNMENTAL FUNDS
YEAR ENDED SEPTEMBER 30, 2013
The Notes to the Basic Financial Statements
are an integral part of these statements.
19
Other Total
General Debt Governmental Governmental
Fund Service Funds Funds
Revenues
Property taxes 13,035,869$ 1,625,953$ - $ 14,661,822$
Sales and alcohol taxes 4,318,768 - - 4,318,768
Franchise taxes 1,583,258 - - 1,583,258
Fines and forfeitures 904,436 - 34,944 939,380
Permits and fees 1,274,218 - 53,700 1,327,918
Intergovernmental 277,503 - 641,138 918,641
Investment earnings 81,949 1,621 3,760 87,330
Donations 107,329 - 256,084 363,413
Miscellaneous 84,673 - - 84,673
Total revenues 21,668,003 1,627,574 989,626 24,285,203
Expenditures
Current
General government 4,194,050 - 56,270 4,250,320
Public safety 10,000,633 - 234,178 10,234,811
Public works 2,204,176 - - 2,204,176
Community development 1,207,264 - - 1,207,264
Community services 2,675,813 - - 2,675,813
Library 1,002,801 - - 1,002,801
Capital outlay 388,965 - 1,553,781 1,942,746
Debt service
Principal - 1,617,507 104,476 1,721,983
Interest and fiscal charges - 692,341 20,481 712,822
Total expenditures 21,673,702 2,309,848 1,969,186 25,952,736
Excess (deficiency) of
revenues over expenditures (5,699) (682,274) (979,560) (1,667,533)
Other financing sources (uses)
Proceeds from capital lease 147,318 - - 147,318
Proceeds from sale of capital assets 27,566 - - 27,566
Insurance recoveries 48,132 - - 48,132
Transfers in 1,329,190 616,350 27,566 1,973,106
Transfers out (27,566) - (171,558) (199,124)
Total other financing
sources (uses) 1,524,640 616,350 (143,992) 1,996,998
Net change in fund balances 1,518,941 (65,924) (1,123,552) 329,465
Fund balances, beginning of year 9,087,219 245,752 1,970,130 11,303,101
Fund balances, end of year 10,606,160$ 179,828$ 846,578$ 11,632,566$
CITY OF FRIENDSWOOD, TEXAS
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
YEAR ENDED SEPTEMBER 30, 2013
The Notes to the Basic Financial Statements
are an integral part of these statements.
20
Net change in fund balances - total governmental funds 329,465$
Amounts reported for governmental activities in the statement of activities are
different because:
Governmental funds report capital outlays as expenditures. However, in the
statement of activities the cost of those assets is allocated over their estimated
useful lives and reported as depreciation expense. This is the amount of capital
assets recorded in the current period. 1,922,561
Depreciation expense on capital assets is reported in the statement of activities
but does not require the use of current financial resources. Therefore, depreciation
expense is not reported as expenditures in the governmental funds. (3,568,210)
The issuance of long term debt (e.g. bonds, capital leases) provides current
financial resources to governmental funds, while the repayment of the principal of
long term debt consumes the current financial resources of governmental funds.
Neither transaction, however, has any effect on net position. Also, governmental
funds report the effect of issuance costs, premiums, discounts, and similar items
when debt is first issued, whereas the amounts are deferred and amortized in the
statement of activities. The effect of these differences in the treatment of long
term debt and related items was:
Proceeds from issuance of long term debt (147,318)$
Amortization of bond issuance costs (22,638)
Amortization of premium on bonds payable 60,468
Amortization of deferred loss on refunding bonds (39,229)
Repayment of long term debt 1,621,063 1,472,346
Current year changes in long term liability for compensated absences do not
require the use of current financial resources; therefore, are not reported as
expenditures in governmental funds.(13,907)
Current year changes in accrued interest payable do not require the use of current
financial resources; therefore, it is not reported as an expenditure in the
governmental funds.10,946
Certain unearned revenues in the government-wide statement of activities that do
not provide current financial resources are not reported as revenue in the
governmental funds.(37,155)
The accruals for net other post employment benefits and net pension obligation do
not require the use of current financial resources and are therefore not recorded in
the governmental fund financial statements.(75,129)
An internal service fund is used by management to charge the cost of fleet
management to individual funds. The change in net position of the internal service
fund is included in the governmental activities in the statement of net position.15,160
Change in net position of governmental activities 56,077$
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF NET POSITION – PROPRIETARY FUNDS
SEPTEMBER 30, 2013
The Notes to the Basic Financial Statements
are an integral part of these statements.
21
Business Type
Activities Governmental
Enterprise Fund Activities
Water and Sewer Internal Service
Current assets
Cash and investments 12,590,805$ 339,315$
Accounts receivable, net of allowance
Customer accounts 1,976,771 -
Other 64,566 251
Due from other funds 900,000 -
Prepaids and other assets 32,709 -
Restricted cash and investments 3,931,395 -
Total current assets 19,496,246 339,566
Noncurrent assets
Working capital deposit 288,862 -
Deferred charges 373,147 -
Capital assets
Land 716,818 -
Machinery and equipment 3,051,452 2,382,123
Water and sewer system 56,556,570 -
Construction in progress 5,635,592 -
Water rights 19,716,695 -
Accumulated depreciation (29,815,776) (1,447,214)
Net capital assets 55,861,351 934,909
Total noncurrent assets 56,523,360 934,909
Total assets 76,019,606 1,274,475
ASSETS
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF NET POSITION – PROPRIETARY FUNDS
SEPTEMBER 30, 2013
(CONTINUED)
The Notes to the Basic Financial Statements
are an integral part of these statements.
22
Business Type
Activities Governmental
Enterprise Fund Activities
Water and Sewer Internal Service
Current liabilities
Accounts payable 2,406,348 -
Accrued liabilities 200,506 -
Accrued interest 127,250 -
Deposits 350,737 -
Compensated absences 15,987 -
Bonds and other long-term debt payable 1,151,419 -
Total current liabilities 4,252,247 -
Noncurrent liabilities
Compensated absences 90,362 -
Bonds and other long-term debt payable 31,748,385 -
Total noncurrent liabilities 31,838,747 -
Total liabilities 36,090,994 -
Net investment in capital assets 22,961,547 934,909
Restricted for capital improvements 176,882 -
Unrestricted 16,790,183 339,566
Total net position 39,928,612$ 1,274,475$
LIABILITIES
NET POSITION
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION
PROPRIETARY FUNDS
YEAR ENDED SEPTEMBER 30, 2013
The Notes to the Basic Financial Statements
are an integral part of these statements.
23
Business Type
Activities Governmental
Enterprise Fund Activities
Water and Sewer Internal Service
Operating revenues
Charges for services 11,462,779$ 318,767$
Total operating revenues 11,462,779 318,767
Operating expenses
Personnel services 1,572,383 -
Sewer operations 1,624,416 -
Water purchases 1,340,432 -
Repairs and maintenance 569,503 -
Supplies 179,087 41
Other services and charges 827,455 -
Depreciation 1,568,090 320,968
Total operating expenses 7,681,366 321,009
Operating income (loss) 3,781,413 (2,242)
Nonoperating revenues (expenses)
Investment income 37,565 1,180
Gain (loss) on sale of capital assets - 16,222
Interest expense and fiscal charges (1,590,395) -
Miscellaneous revenue 35,790 -
Total nonoperating revenues (expenses) (1,517,040) 17,402
Income before transfers 2,264,373 15,160
Transfers out (1,773,982) -
Change in net position 490,391 15,160
Net position, beginning of year 39,438,221 1,259,315
Net position, end of year 39,928,612$ 1,274,475$
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF CASH FLOWS – PROPRIETARY FUNDS
YEAR ENDED SEPTEMBER 30, 2013
The Notes to the Basic Financial Statements
are an integral part of these statements.
24
Business Type
Activities Governmental
Enterprise Fund Activities
Water and Sewer Internal Service
OPERATING ACTIVITIES
Cash received from customers 11,483,599$ 318,944$
Cash payments to suppliers for goods
and services (2,976,485) (41)
Cash payments to employees for services (1,574,930) -
Net cash provided by operating activities 6,932,184 318,903
NONCAPITAL FINANCING ACTIVITIES
Transfer out (1,773,982) -
Net cash used in noncapital
financing activities (1,773,982) -
CAPITAL AND RELATED FINANCING ACTIVITIES
Proceeds from the sale of capital assets - 23,670
Acquisition and construction of capital assets (2,440,055) (431,601)
Repayment of debt (1,120,000) -
Interest paid on debt (1,559,851) -
Net cash used in capital and related
financing activities (5,119,906) (407,931)
INVESTING ACTIVITIES
Investment income 41,543 1,180
Miscellaneous revenue 35,790 -
Net cash provided by investing activities 77,333 1,180
Net change in cash and cash equivalents 115,629 (87,848)
CASH AND CASH EQUIVALENTS, beginning of year 16,406,571 427,163
CASH AND CASH EQUIVALENTS, end of year 16,522,200$ 339,315$
CITY OF FRIENDSWOOD, TEXAS
STATEMENT OF CASH FLOWS – PROPRIETARY FUNDS
YEAR ENDED SEPTEMBER 30, 2013
(CONTINUED)
The Notes to the Basic Financial Statements
are an integral part of these statements.
25
Business Type
Activities Governmental
Enterprise Fund Activities
Water and Sewer Internal Service
Reconciliation of operating income (loss)
to net cash provided by operating activities
Operating income (loss) 3,781,413$ (2,242)$
Adjustments to reconcile operating income (loss)
to net cash provided by operating activities
Depreciation and amortization 1,568,090 320,968
Change in assets and liabilities
Accounts receivable (1,363) 177
Prepaids and other assets 474 -
Accounts payable 1,636,070 -
Accrued liabilities (74,683) -
Deposits 22,183 -
Net cash provided by operating activities 6,932,184$ 318,903$
Reconciliation of cash to statement of net position
Cash and investments 12,590,805$ 339,315$
Restricted cash and investments 3,931,395 -
CASH AND CASH EQUIVALENTS 16,522,200$ 339,315$
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
26
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Friendswood, Texas (the City) was incorporated on October 15, 1960. The City
charter provides for a City Council-City Manager form of government. The Mayor and six
Council members are elected from the City at large serving three-year terms. Currently, the
City charter provides for a Council term limitation of four terms. The City Council is the
principal legislative body of the City. The City Manager is appointed by a majority vote of
the City Council and is responsible to the Council for the administration of all the affairs of
the City. The City Manager is responsible for law enforcement, appointment and removal of
department directors and employees, supervision and control of all City departments, and
preparation of the annual budget. The Mayor presides at meetings of the City Council and
can vote. The City provides the following services: public safety, streets, parks and
recreation, library, water and sewer, sanitation, planning and zoning, building inspection,
code enforcement, and general administrative services.
Financial Reporting Entity
The City is an independent political subdivision of the State of Texas governed by an
elected six-member Council and Mayor and is considered a primary government. As
required by generally accepted accounting principles, these financial statements have
been prepared based on considerations regarding the potential for inclusion of other
entities, organizations, or functions as part of the City’s financial reporting entity. Based
on these considerations, the West Ranch Management District has been included in the
City’s reporting entity as a discretely presented component unit. Additionally, as the City
is considered a primary government for financial reporting purposes, its activities are not
considered a part of any other governmental or other type of reporting entity.
Consideration regarding the potential for inclusion of other entities, organizations, or
functions in the City’s financial reporting entity is based on criteria prescribed by
generally accepted accounting principles. These same criteria are evaluated in
considering whether the City is a part of any other governmental or other type of
reporting entity. The overriding elements associated with prescribed criteria considered
in determining that the City’s financial reporting entity status is that of a primary
government are that it has a separately elected governing body; it is legally separate;
and it is financially independent of other state and local governments. Additional
prescribed criteria under generally accepted accounting principles include considerations
pertaining to organizations for which the primary government is financially accountable;
and considerations pertaining to other organizations for which the nature and
significance of their relationship with the primary government are such that exclusion
would cause the reporting entity’s financial statements to be misleading or incomplete.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
27
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Financial Reporting Entity – Continued
The West Ranch Management District (the District), a discretely presented component
unit, was created under Section 59, Article XVI of the Texas Constitution added by an
Act of the 79th Legislature of the State of Texas, effective June 17, 2005, in accordance
with the Texas Water Code, Chapter 54. The District operates in accordance with
Chapters 3837, Texas Special District Local Laws Code, Chapters 49 and 54 of the
Texas Water Code and Chapter 375 of the Texas Local Government Code, and is
subject to the continuing supervision of the Texas Commission on Environmental
Quality. The District was created to promote and encourage employment and the public
welfare within the District. The affairs of the District are managed by a Board of
Directors composed of persons appointed by the City Council. The City is financially
accountable for the District because City Council must approve any debt issuances.
Complete financial statements from the component may be obtained at the District’s
administrative office.
Basis of Presentation
The government-wide financial statements (i.e., the statement of net position and the
statement of activities) report information on all activities of the primary government and
its component unit. For the most part, the effect of interfund activity has been removed
from these statements. Governmental activities, which normally are supported by taxes
and intergovernmental revenue, are reported separately from business-type activities,
which rely to a significant extent on fees and charges for support. Likewise, the primary
government is reported separately from certain legally separate component units for
which the primary government is financially accountable.
The statement of activities demonstrates the degree to which the direct expenses of a
given function or segment are offset by program revenue. Direct expenses are those
that are clearly identifiable with a specific function or segment. Program revenue
includes 1) charges to customers or applicants who purchase, use, or directly benefit
from goods, services, or privileges provided by a given function or segment, and
2) grants and contributions that are restricted to meeting the operational or capital
requirements of a particular function or segment. Taxes and other items not properly
included among program revenue are reported instead as general revenue.
Separate financial statements are provided for governmental funds and proprietary
funds. Major individual governmental funds and major individual enterprise funds are
reported as separate columns in the fund financial statements.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
28
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Measurement Focus/Basis of Accounting
The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting, as are the proprietary fund
financial statements. Revenues are recorded when earned and expenses are recorded
when a liability is incurred, regardless of the timing of related cash flows. Property taxes
are recognized as revenue in the year for which they are levied. Grants and similar
items are recognized as revenue as soon as all eligibility requirements imposed by the
provider have been met.
Governmental fund financial statements are reported using the current financial
resources measurement focus and the modified accrual basis of accounting. Revenues
are recognized as soon as they are both measurable and available. Revenues are
considered to be available when they are collectible within the current period or soon
enough thereafter to pay liabilities of the current period. For this purpose, the
government considers revenue to be available if collected within 60 days of the end of
the current fiscal period. Expenditures generally are recorded when a liability is
incurred, as under accrual accounting. However, debt service expenditures, as well as
expenditures related to compensated absences and claims and judgments, are recorded
only when payment is due.
Property taxes, franchise taxes, sales taxes, and interest associated with the current
fiscal period are all considered to be susceptible to accrual and, accordingly, have been
recognized as revenue of the current fiscal period. All other revenue items are
considered to be measurable and available only when cash is received by the City.
The City reports the following major governmental funds:
The General Fund is the City’s primary operating fund. It accounts for all financial
resources of the general government, except those required to be accounted for in
another fund.
The Debt Service Fund is used to account for the property taxes levied for payment
of principal and interest on all governmental debt of the City.
Other governmental funds is a summarization of all the non-major governmental funds.
The City reports the following major enterprise fund:
The Water and Sewer Fund is used to account for the activities of the City’s water
and wastewater operations.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
29
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Measurement Focus/Basis of Accounting – Continued
Additionally, the City reports the following fund type:
The Internal Service Fund is used to account for fleet management services
provided to other departments of the City on a cost reimbursement basis.
Private-sector standards of accounting and financial reporting issued prior to
December 1, 1989 generally are followed in both the government-wide and enterprise
fund financial statements to the extent that those standards do not conflict with or
contradict guidance of the Governmental Accounting Standards Board (GASB).
Governments also have the option of following subsequent private-sector guidance for
their business-type activities and Enterprise Funds, subject to this same limitation. The
City has elected not to follow subsequent private-sector guidance.
As a general rule, the effect of interfund activity has been eliminated from the
government-wide financial statements. Exceptions to this general rule are charges
between the City’s water and sewer function and various other functions of the
government. Elimination of these charges would distort the direct costs and program
revenue reported for the various functions concerned.
Proprietary funds distinguish operating revenues and expenses from nonoperating
items. Operating revenues and expenses generally result from providing services and
producing and delivering goods in connection with a proprietary fund’s principal ongoing
operations. The principal operating revenues of the Water and Sewer enterprise fund
and of the City’s internal service fund are charges to customers for sales and services.
Operating expenses for the enterprise fund and internal service fund include the cost of
sales and services, administrative expenses, and depreciation on capital assets. All
revenue and expenses not meeting this definition are reported as nonoperating revenue
and expenses.
Cash and Investments
Cash and investments include cash on hand, deposits with financial institutions,
short-term investments in a state-managed public funds investment pool account
(TexPool), and two privately managed public funds investment pools (Lone Star and
Texas Class). Other investments consist mainly of U. S. government treasury bills,
treasury notes and other U. S. government obligations. Restricted cash and investments
are assets restricted for specific use. Restricted cash includes cash on deposit with
financial institutions and investment pools.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
30
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Cash and Investments – Continued
In accordance with GASB Statement No. 31, the City’s general policy is to report money
market investments and short-term participating interest-earning investment contracts at
amortized cost and to report nonparticipating interest-earning investment contracts using
a cost-based measure. However, if the fair value of an investment is significantly
affected by the impairment of the credit standing of the issuer or by other factors, it is
reported at fair value. All other investments are reported at fair value unless a legal
contract exists which guarantees a higher value. The term “short-term” refers to
investments which have a remaining term of one year or less at time of purchase. The
term “nonparticipating” means that the investment’s value does not vary with market
interest rate changes.
The City maintains a pooled cash and investments account for all funds of the City.
Each fund’s positive equity in the pooled cash account is presented as “cash and
investments” in the financial statements. Negative equity balances are reclassified and
are reflected as interfund accounts payable. Interest income and interest expense are
allocated monthly to each respective individual fund based on their representative fund
balances.
The City’s cash and cash equivalents are considered to be cash on hand, demand
deposits, and short-term investments with original maturities of three months or less
from the date of acquisition.
Receivables and Payables
Activity between funds that are representative of lending/borrowing arrangements
outstanding at the end of the fiscal year are referred to as either “due to/from other
funds” (i.e., the current portion of interfund loans) or “advances to/from other funds”
(i.e., the noncurrent portion of interfund loans). All other outstanding balances between
funds are reported as “due to/from other funds.” Any residual balances outstanding
between the governmental activities and business-type activities are reported in the
government-wide financial statements as “internal balances.”
All trade and property tax receivables are shown net of an allowance for uncollectible
accounts. Management estimates an allowance for trade accounts receivable based on
past experience, historical losses, and other pertinent factors. The property tax
receivable allowance is equal to 10 percent of outstanding property taxes at
September 30, 2013.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
31
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Receivables and Payables – Continued
The City’s property taxes are levied annually in October on the basis of the Appraisal
District’s assessed values as of January 1 of that calendar year. Appraised values are
established by the Appraisal District at market value and assessed at 100% of appraised
value less exemptions. The City’s property taxes are billed and collected by Galveston
County. Such taxes are applicable to the fiscal year in which they are levied and
become delinquent with an enforceable lien on property on February 1 of the
subsequent calendar year.
Property taxes are prorated between operations and debt service based on rates
adopted for the year of the levy. For the current year, the City levied property taxes of
$0.5970 per $100 of assessed valuation that were prorated between operations and
debt service in the amounts of $0.5307 and $0.0663, respectively. The resulting tax
levies were approximately $12.9 and $1.6 million for operations and debt service,
respectively, based on a total taxable valuation of approximately $2.4 billion for the 2012
tax year.
West Ranch Management District bond resolutions require that the District levy and
collect an ad valorem debt service tax sufficient to pay interest and principal on bonds
when due. During the year ended July 31, 2013, the District levied an ad valorem debt
service tax at the rate of $0.4700 per $100 of assessed valuation, which resulted in a tax
levy of $741,433 on the taxable valuation of approximately $156 million for the 2012 tax
year.
During the year ended July 31, 2013, the District levied an ad valorem maintenance tax
at the rate of $0.1000 per $100 of assessed valuation and an ad valorem road tax at the
rate of $0.0800 per $100 of assessed valuation, which resulted in a tax levy of $157,752
and $126,201, respectively, on the taxable valuation of approximately $156 million for
the 2012 tax year.
Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and
are recorded as prepaid items in both government-wide and fund financial statements.
The City applies the consumption method in accounting for prepaid items in the
governmental funds.
Restricted Assets
Certain proceeds of the City’s enterprise fund revenue bonds, as well as certain
resources set aside for their repayment, are classified as restricted assets on the
balance sheet because their use is limited by applicable bond covenants.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
32
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Contract with West Ranch Management District
The District approved a contract with the City effective August 15, 2005, as amended.
Under the terms of the contract, the District is to pay for construction of water
distribution, sanitary sewer, drainage, transportation, education and recreation facilities
to serve the District.
The District shall be the owner of the system until the system is completed, approved by
the City and conveyed to it, at which time ownership will vest in the City. The District will
own and operate detention facilities to serve the District. Pursuant to the contract, the
District shall have a security interest therein until all bonds issued by the District are
retired.
Capital Assets
Capital assets, which include property, plant, equipment, infrastructure, and water rights,
are reported in the applicable governmental or business-type activities columns in the
government-wide financial statements. The City defines capital assets as assets with an
initial, individual cost of more than $5,000 and an estimated useful life in excess of one
year. Such assets are recorded at historical cost or estimated historical cost if actual
historical cost is not available. Donated capital assets are recorded at estimated fair
market value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or
materially extend assets’ lives are not capitalized.
The City’s property, plant and equipment is depreciated using the straight-line method
over the following useful lives:
Buildings and improvements 20 - 50 years
Machinery and equipment 5 - 10 years
Infrastructure 40 - 50 years
Water and sewer system 40 - 50 years
The West Ranch Management District’s capital assets are depreciated using the
straight-line method over estimated useful lives of 10 to 45 years.
Compensated Absences
The City’s employees earn vacation and sick leave, which may either be taken or
accumulated, up to certain amounts, until paid upon resignation or retirement. All
vacation and sick leave pay is accrued when incurred in the government-wide and
proprietary fund financial statements. A liability for these amounts is reported in
governmental funds only if they have matured, for example, as a result of employee
resignations and retirements.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
33
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Long-Term Obligations
In the government-wide financial statements and proprietary fund types in the fund
financial statements, long-term debt and other long-term obligations are reported as
liabilities in the applicable governmental activities, business-type activities, or proprietary
fund type statement of net position. Bond premiums and discounts, as well as issuance
costs, are deferred and amortized over the life of the bonds using the straight-line
method, which approximates the effective interest method. Bonds payable are reported
net of the applicable bond premium or discount. Bond issuance costs are reported as
deferred charges and amortized over the term of the related debt.
In the fund financial statements, governmental fund types recognize bond premiums and
discounts, as well as bond issuance costs during the current period. The face amount of
debt issued is reported as other financing sources. Premiums received on debt
issuances are reported as other financing sources while discounts on debt issuances are
reported as other financing uses. Issuance costs, whether or not withheld from the
actual debt proceeds received, are reported as debt service expenditures.
Fund Balances and Net Position
Government-Wide Financial Statements:
During the year ended September 30, 2013, the City adopted the provisions of GASB
Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred
Inflows of Resources, and Net Position (GASB 63). GASB 63 amends the net asset
reporting requirements in earlier pronouncements by incorporating deferred outflows of
resources and deferred inflows of resources into the definitions of the required
components of the residual measure and by renaming that measure as net position,
rather than net assets. The effect of the implementation of GASB 63 during fiscal year
2013 was to replace the term of “net assets” with “net position.”
Net position on the Statement of Net Position includes the following categories:
Net investment in capital assets – the component of net position that reports the
difference between capital assets less both the accumulated depreciation and the
outstanding balance of debt, net of premiums and discounts, that is directly
attributable to the acquisition, construction or improvement of these capital assets.
Restricted – Net position is reported as restricted when there are limitations imposed
on its use either through the enabling legislation adopted by the City or through
external restrictions imposed by creditors, grantors, or laws or regulations of other
governments.
Unrestricted – the difference between the assets and liabilities that is not reported in
any of the classifications above.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
34
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Fund Balances and Net Position – Continued
Governmental Fund Financial Statements:
The City has adopted the provisions of GASB Statement No. 54, Fund Balance
Reporting and Governmental Fund Type Definitions (GASB 54). GASB 54 establishes
fund balance classifications that comprise a hierarchy based primarily on the extent to
which a government is bound to observe constraints imposed upon the use of the
resources reported in governmental funds. Fund balance classifications, under GASB
54 are non-spendable, restricted, committed, assigned, and unassigned. These
classifications reflect not only the nature of funds, but also provide clarity to the level of
restriction placed upon fund balance. Fund balance can have different levels of
constraint, such as external versus internal compliance requirements. Unassigned fund
balance is a residual classification within the general fund. The general fund should be
the only fund that reports a positive unassigned balance. In all other funds, unassigned
is limited to negative residual fund balance.
In accordance with GASB 54, the City classifies governmental fund balances as follows:
Non-spendable – includes amounts that cannot be spent because they are either not
in spendable form, or, for legal or contractual reasons, must be kept intact. This
classification includes prepaid items and the fund balance of the City’s permanent
fund.
Restricted – includes fund balance amounts that are constrained for specific
purposes which are imposed by providers, such as creditors or amounts restricted
due to constitutional provisions or enabling legislation. This classification includes
retirement of long term debt, construction programs, City ordinances, and other
federal and state grants.
Committed – includes fund balance amounts that are constrained for specific
purposes that are internally imposed by the City through formal action in an open
meeting of the highest level of decision making authority. Committed fund balance is
reported pursuant to resolution passed by the City Council. At September 30, 2013,
the City had no committed fund balance amounts.
Assigned – includes fund balance amounts that are self-imposed by the City to be
used for a particular purpose. Fund balance can be assigned by the City Council or
the City Manager, pursuant to the City’s fund balance policy. At September 30,
2013, the City’s assigned fund balance included amounts assigned for
encumbrances.
Unassigned – includes residual positive fund balance within the general fund which
has not been classified within the other above mentioned categories. Unassigned
fund balance may also include negative balances for any governmental fund if
expenditures exceed amounts restricted, committed, or assigned for those specific
purposes.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
35
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Fund Balances and Net Position – Continued
Governmental Fund Financial Statements – Continued:
When both restricted and unrestricted fund balances are available for use, it is the City’s
policy to use restricted fund balance first, then unrestricted fund balance. Furthermore,
committed fund balances are reduced first, followed by assigned amounts and then
unassigned amounts when expenditures are incurred for purposes for which amounts in
any of those unrestricted fund balance classifications are available.
The City has established a minimum fund balance policy whereby the City’s unassigned
general fund balance will be maintained at levels sufficient to protect the City’s
creditworthiness, as well as its financial position, from unforeseeable emergencies. The
City will strive to maintain the unassigned general fund balance at a minimum of 90 days
of prior year audited operating expenditures.
Estimates
The preparation of financial statements, in conformity with generally accepted
accounting principles, requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of contingent
liabilities at the date of the financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual amounts could differ materially from
those estimates.
New Accounting Pronouncements
In March 2013, the GASB issued Statement No. 65, Items Previously Reported as
Assets and Liabilities (GASB 65). This statement specifies the items that were
previously reported as assets and liabilities that should now be reported as deferred
outflows of resources, deferred inflows of resources, outflows of resources, or inflows of
resources. The requirements of this statement are effective for financial statements for
periods beginning after December 15, 2012. The City will adopt GASB 65 in the fiscal
year ending September 30, 2014 and is currently evaluating the impact of this standard
on its financial statements.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
36
NOTE 2. DEPOSITS AND INVESTMENTS
Under provisions of state and local statutes, the City’s investment policies, and provisions of
the City’s depository contracts with an area financial institution, the City is authorized to
place available deposits and investments in the following:
1. Obligations of the U. S., its agencies and instrumentalities;
2. Certificates of Deposit issued by state and national banks or savings or loan
associations domiciled in this state that are guaranteed or insured by the
Federal Deposit Insurance Corporation or collateralized in accordance with
Section 2256.010, the Texas Government Code, in face amounts not to exceed
$100,000;
3. No-load money market mutual funds; and
4. TexPool, Lone Star Investment Pool and Texas Class.
The City Council has adopted a written investment policy regarding the investments of its
funds as defined by the Public Funds Investment Act of 1995 (Chapter 2256, Texas
Government Code). The investments of the City are in compliance with the Council’s
investment policies. The City did not have any derivative investment products during the
current year. All significant legal and contractual provisions for investments were complied
with during the year.
Deposits and investments as of September 30, 2013 are classified in the accompanying
financial statements as follows:
Governmental activities 12,319,289$
Business-type activities 16,522,200
28,841,489$
Deposits and investments as of September 30, 2013 consist of the following:
Deposits with financial institutions 2,218,285$
Investments 26,623,204
28,841,489$
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
37
NOTE 2. DEPOSITS AND INVESTMENTS – CONTINUED
As of September 30, 2013, the City had the following investments:
Fair Value
Texas Class 6,466,566$
Lone Star Government Overnight Fund 1,089,324
TexPool 1,586,536
U.S. Agency Securities:
Federal Farm Credit Bank 7,497,523 679
Federal Home Loan Bank 5,488,809 835
Federal National Mortgage Association 2,496,732 802
Federal Home Loan Mortgage Corporation 1,997,714 771
Total U.S. Agency Securities 17,480,778
Total portfolio 26,623,204$
Investment Type
Weighted Average
Maturity (Days)
The City’s investment pools are 2a7-like pools. A 2a7-like pool is one which is not registered
with the Securities and Exchange Commission (SEC) as an investment company, but
nevertheless has a policy that it will, and does, operate in a manner consistent with the
SEC’s Rule 2a7 of the Investment Company Act of 1940. The City’s investments in these
pools are the same as the value of the pool shares, which are valued based on quoted
market rates.
The City invests in Texas Local Government Investment Pool (TexPool), which was created
under the Interlocal Cooperation Act, Texas Government Code Ann. Chapter 791 and the
Texas Public Funds Investment Act. The Texas Treasury Safekeeping Trust Company (the
Trust) is trustee of TexPool and is a limited purpose trust company authorized pursuant to
Texas Government Code Ann. Section 404.103 for which the Texas State Comptroller is
sole officer, director and shareholder. The advisory board of TexPool is composed of
members appointed pursuant to the requirements of the Texas Public Funds Investment
Act.
The City invests in Texas Class Investment Pool which was established in 1996 pursuant to
the Texas Public Funds Investment Act. The pool is governed by a 7-member board of
trustees, who are elected by pool participants. The Cutwater Investor Services Corp. serves
as the pools program administrator and Wells Fargo Bank Texas, NA, serves as custodian.
The City invests in Lone Star Investment Pool pursuant to the Texas Public Funds
Investment Act. This pool is governed by an 11-member board of trustees all of which are
pool participants. The Bank of New York Mellon acts as custodian and provides valuation
services.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
38
NOTE 2. DEPOSITS AND INVESTMENTS – CONTINUED
Interest Rate Risk. In accordance with its investment policy, the City manages its exposure
to declines in fair values by structuring the investment portfolio so that securities mature to
meet cash requirements for ongoing operations and invest operating funds primarily in
short-term securities.
Custodial Credit Risk. In the case of deposits, this is the risk that in the event of a bank
failure, the City’s deposits may not be returned. State statutes require that all deposits in
financial institutions be fully collateralized by U. S. Government obligations or its agencies
and instrumentalities or direct obligations of Texas or its agencies and instrumentalities that
have a fair value of not less than the principal amount of deposits. As of September 30,
2013, all of the City’s $2,218,285 balance on deposit with financial institutions was
collateralized with securities held by the pledging financial institution in the City’s name.
Credit Risk. It is the City’s policy to limit its investments to investment types with an
investment quality rating not less than A or its equivalent by a nationally recognized
statistical rating organization. The City’s investments as of September 30, 2013, were rated
as follows:
Rating Rating Agency
Texas Class AAAm Standard & Poor's
Lone Star Government Overnight Fund AAAf Standard & Poor's
TexPool AAAm Standard & Poor's
U.S. Agency Securities:
Federal Farm Credit Bank Aaa Moody's Investor Service
Federal Home Loan Bank Aaa Moody's Investor Service
Federal National Mortgage Association Aaa Moody's Investor Service
Federal Home Loan Mortgage Corporation Aaa Moody's Investor Service
Investment Type
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
39
NOTE 3. ACCOUNTS RECEIVABLE AND UNEARNED REVENUE
Receivables as of September 30, 2013 for the City’s individual major funds, nonmajor funds
in the aggregate and the Internal Service Fund including the applicable allowances for
uncollectible accounts, are as follows:
Debt Water and Internal
General Service Nonmajor Sewer Service Total
Receivables:
Property taxes 281,009$ 38,236$ -$ -$ -$ 319,245$
Sales taxes 864,288 - - - - 864,288
Franchise taxes 381,234 - - - - 381,234
Customer accounts 183,579 - 31,271 2,016,163 - 2,231,013
Accrued interest 7,793 269 437 10,393 251 19,143
Court fines 438,006 - 4,588 - - 442,594
Intergovernmental 62,490 - 445,166 - - 507,656
Other 27,244 - - 54,173 - 81,417
Gross receivables 2,245,643 38,505 481,462 2,080,729 251 4,846,590
Less: allowance for
uncollectibles 313,662 3,824 - 39,392 - 356,878
Net total receivables 1,931,981$ 34,681$ 481,462$ 2,041,337$ 251$ 4,489,712$
Governmental Funds Proprietary Funds
Governmental funds report unearned revenue in connection with receivables for revenue
that is not considered to be available to liquidate liabilities of the current period.
Governmental funds also defer revenue recognition in connection with resources that have
been received, but not yet earned. At the end of the current fiscal year, the various
components of unearned revenue reported in the governmental funds were as follows:
Unearned
Revenue
General Fund
Delinquent property taxes 252,908$
Court fines 192,376
Miscellaneous 16,089
Total General Fund 461,373
Court Security and Technology Fund
Court fines 4,567
Total Court Security and Technology Fund 4,567
Debt Service Fund
Delinquent property taxes 34,413
Total Debt Service Fund 34,413
Total Governmental Funds 500,353$
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
40
NOTE 4. CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2013, was as follows:
Beginning Reclassifications/ Ending
Balance Increases Decreases Balance
Governmental activities
Capital assets not being depreciated
Land 24,007,398$ -$ -$ 24,007,398$
Construction in progress 3,277,293 1,597,437 (3,847,997) 1,026,733
Total capital assets not
being depreciated 27,284,691 1,597,437 (3,847,997) 25,034,131
Capital assets being depreciated
Buildings and improvements 34,784,890 - 3,662,668 38,447,558
Machinery and equipment 15,772,730 942,055 (466,956) 16,247,829
Infrastructure 67,671,399 - - 67,671,399
Total capital assets
being depreciated 118,229,019 942,055 3,195,712 122,366,786
Less accumulated depreciation
Buildings and improvements 13,100,614 1,291,922 - 14,392,536
Machinery and equipment 7,612,185 1,099,888 (459,507) 8,252,566
Infrastructure 37,130,616 1,497,368 - 38,627,984
Total accumulated
depreciation 57,843,415 3,889,178 (459,507) 61,273,086
Total capital assets
being depreciated, net 60,385,604 (2,947,123) 3,655,219 61,093,700
Governmental activities
capital assets, net 87,670,295$ (1,349,686)$ (192,778)$ 86,127,831$
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
41
NOTE 4. CAPITAL ASSETS – CONTINUED
Beginning Reclassifications/ Ending
Balance Increases Decreases Balance
Business-type activities
Capital assets not being depreciated
Land 716,818$ -$ -$ 716,818$
Water rights 19,716,695 - - 19,716,695
Construction in progress 4,742,441 2,434,490 (1,541,339) 5,635,592
Total capital assets not
being depreciated 25,175,954 2,434,490 (1,541,339) 26,069,105
Capital assets being depreciated
Machinery and equipment 3,045,887 5,565 - 3,051,452
Water and sewer system 55,015,231 - 1,541,339 56,556,570
Total capital assets
being depreciated 58,061,118 5,565 1,541,339 59,608,022
Less accumulated depreciation:
Machinery and equipment 2,619,318 29,081 - 2,648,399
Water and sewer system 25,628,368 1,539,009 - 27,167,377
Total accumulated
depreciation 28,247,686 1,568,090 - 29,815,776
Total capital assets
being depreciated, net 29,813,432 (1,562,525) 1,541,339 29,792,246
Business-type activities
capital assets, net 54,989,386$ 871,965$ -$ 55,861,351$
Component unit
Capital assets not being depreciated
Land 5,538,985$ 309,372$ -$ 5,848,357$
Capital assets being depreciated
Water production and
distribution facilities 481,968 1,499 - 483,467
Less accumulated depreciation:
Water production and
distribution facilities 19,830 10,745 - 30,575
Total capital assets
being depreciated, net 462,138 (9,246) - 452,892
Component unit
capital assets, net 6,001,123$ 300,126$ -$ 6,301,249$
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
42
NOTE 4. CAPITAL ASSETS – CONTINUED
Depreciation expense was charged to functions/programs of the primary government as
follows:
Governmental activities
General government 239,063$
Public safety 563,286
Public works 2,180,793
Community services 585,068
Capital assets held by the City's internal service fund are
charged to the various functions based on their usage 320,968
Total depreciation expense - governmental activities 3,889,178$
Business-type activities
Water and sewer 1,568,090$
Total depreciation expense - business-type activities 1,568,090$
Unexpended commitments for construction projects in progress were $1,597,046 at
September 30, 2013.
NOTE 5. INTERFUND BALANCES AND ACTIVITIES
Interfund balances (net) at September 30, 2013 consisted of the following individual fund
balances:
Due to Fund Due from Fund Amount
General TDRA 1,495,557$ Balance of TDRA fund expenditures
funded by the general fund, pending
grant reimbursements
Water and sewer EDA 900,000 Return of excess amount previously
transferred, upon decrease in City's
obligation under grant award
2,395,557$
Purpose
All amounts due are scheduled to be repaid within one year.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
43
NOTE 5. INTERFUND BALANCES AND ACTIVITIES – CONTINUED
During the year ended September 30, 2013, transfers between funds occurred as described
below:
Transfers In Transfers Out Amount
Debt service Water and sewer 616,350$ To fund Series 2010B debt service
payments
Fire/EMS donation General 27,566 Funds received from sale of
Fire/EMS vehicles
General TDRA 47,403 To return excess matching
contribution
General Park land dedication 124,155 To fund miscellaneous projects
General Water and sewer 1,157,632 To fund indirect costs for
administrative expenses
1,973,106$
Purpose
NOTE 6. LONG-TERM DEBT
The City issues a variety of long-term debt instruments in order to acquire and/or construct
major capital facilities and equipment for governmental and business-type activities. These
instruments include general obligation bonds, certificates of obligation, revenue bonds, and
capital leases. These debt obligations are secured by either future tax revenue, water and
sewer system revenue, or liens on property and equipment. Debt obligations that are
intended to be repaid from water and sewer system revenue have been recorded as
business-type activities. All other long-term obligations of the City are considered to be
governmental type activities.
Federal Arbitrage
General obligation bonds, combination tax and revenue bonds, and certificates of
obligation are subject to the provisions of the Internal Revenue Code of 1986 related to
arbitrage and interest income tax regulations under those provisions.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
44
NOTE 6. LONG-TERM DEBT – CONTINUED
Bonds Payable and Certificates of Obligation
The following schedule summarizes the terms of the City’s general obligation bonds,
combination tax and revenue bonds, and certificates of obligation outstanding and their
corresponding allocations to the governmental and business-type activities at
September 30, 2013:
Final Governmental Business-Type
Maturity Interest Rate Activities Activities
General Obligation Bonds
2005 Permanent Improvement
and Refunding $ 9,800,000 2020 2.85% - 4.375% 3,785,000$ -$
2010A Permanent Improvement 3,460,000 2035 1.0% - 4.75% 3,190,000 -
2010B Permanent Improvement
and Refunding 5,460,000 2021 1.0% - 4.0% 4,430,000 -
2012 General Obligation Refunding 8,890,000 2026 2.0% - 3.5% 8,825,000 -
20,230,000 -
Revenue Bonds
2006 Waterworks and Sewer System
Revenue and Refunding 24,285,000 2031 4.0% - 5.0% - 21,810,000
2009 Waterworks and Sewer System 12,120,000 2028 2.0% - 4.8% - 11,185,000
- 32,995,000
Total Bonds and Certificates of Obligation 20,230,000$ 32,995,000$
Series and Original Issue Amount
Annual debt service requirements for the City’s bonds and certificates of obligation are
as follows:
Year Ending
September 30, Principal Interest Principal Interest Total
2014 1,415,000$ 630,233$ 1,165,000$ 1,504,006$ 4,714,239$
2015 1,455,000 592,152 1,205,000 1,457,771 4,709,923
2016 1,505,000 552,992 1,240,000 1,409,734 4,707,726
2017 1,550,000 513,382 1,295,000 1,358,571 4,716,953
2018 - 2022 7,800,000 1,901,885 7,485,000 5,884,488 23,071,373
2023 - 2027 5,200,000 713,645 10,190,000 3,775,250 19,878,895
2028 - 2032 760,000 213,608 8,830,000 1,212,368 11,015,976
2033 - 2035 545,000 39,538 1,585,000 80,125 2,249,663
20,230,000$ 5,157,435$ 32,995,000$ 16,682,313$ 75,064,748$
Governmental Activities Business -Type Activities
Prior Year Defeasance of Bonds
In prior years, the City defeased certain bonds by placing the proceeds of new bonds in
an irrevocable trust to provide future debt service payments on the old bonds.
Accordingly, the trust account assets and liabilities for the defeased bonds are not
included in the City’s financial statements. On September 30, 2013, $18,820,000 of
bonds considered defeased are still outstanding.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
45
NOTE 6. LONG-TERM DEBT – CONTINUED
Obligations Under Capital Leases
The City has entered into capital lease agreements in order to purchase machinery and
equipment for public works, police and fire departments. The assets acquired through
these lease agreements are as follows:
Governmental
Asset: Activities
Machinery and equipment 1,745,048$
Less: accumulated depreciation (378,623)
Total 1,366,425$
The following is a summary of future lease payments due on this machinery and
equipment:
Year Ending Lease
September 30, Obligation
2014 284,322$
2015 284,322
2016 191,868
2017 63,056
2018 - 2019 126,097
Total 949,665
Less: interest portion (72,684)
Obligations under capital leases 876,981$
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
46
NOTE 6. LONG-TERM DEBT – CONTINUED
Changes in Long-term Liabilities
Long-term liability activity of the primary government for the year ended September 30,
2013, was as follows:
Balance Balance Due
Beginning End of Within One
of Year Increase Decrease Year Year
Governmental activities
General obligation bonds 21,605,000$ -$ (1,375,000)$ 20,230,000$ 1,415,000$
Premium on bond issuance 797,761 - (60,468) 737,293 60,468
Deferred loss on refunding bonds (549,210) - 39,229 (509,981) (39,229)
Capital lease obligations 975,726 147,318 (246,063) 876,981 253,567
Net pension obligation 633,108 1,796,817 (1,791,222) 638,703 -
Net OPEB obligation 616,197 85,843 (16,309) 685,731 -
Compensated absences 780,373 727,062 (713,155) 794,280 148,402
Total governmental
activities 24,858,955 2,757,040 (4,162,988) 23,453,007 1,838,208
Business type activities
Revenue bonds 34,115,000 - (1,120,000) 32,995,000 1,165,000
Discount on bond issuance (54,949) - 2,497 (52,452) (2,498)
Premium on bond issuance 292,928 - (16,275) 276,653 16,274
Deferred loss on refunding bonds (346,756) - 27,359 (319,397) (27,357)
Compensated absences 108,896 56,333 (58,880) 106,349 15,987
Total business type activities 34,115,119 56,333 (1,165,299) 33,006,153 1,167,406
Total primary government 58,974,074$ 2,813,373$ (5,328,287)$ 56,459,160$ 3,005,614$
The compensated absences liability attributable to the governmental activities will be
liquidated primarily by the general fund. The general fund has typically been used in
prior years to liquidate the net pension obligation and net OPEB obligation.
West Ranch Management District
The following schedule summarizes the terms of the West Ranch Management District’s
general obligation bonds at July 31, 2013:
Amounts Outstanding Interest Range of Callable
Series July 31, 2013 Rates Maturities Dates *
Series 2010 $6,640,000 3.25% to 5.25% 2013 - 2040 September 1, 2020
Road Series 2010A $1,790,000 3.50% to 5.00% 2013 - 2040 September 1, 2020
Series 2012A $3,110,000 3.50% to 4.10% 2027 - 2040 September 1, 2020
Series 2012B $1,680,000 3.00% to 4.75% 2013 - 2026 September 1, 2016
Road Series 2013 $1,390,000 2.00% to 3.00% 2014 - 2028 September 1, 2021
*Or any date thereafter; callable at par plus accrued interest to the date of redemption.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
47
NOTE 6. LONG-TERM DEBT – CONTINUED
West Ranch Management District – Continued
Annual debt service requirements for the District’s bonds are as follows:
Year Ending
July 31, Principal Interest Total
2014 225,000$ 622,595$ 847,595$
2015 330,000 616,777 946,777
2016 340,000 606,995 946,995
2017 350,000 597,038 947,038
2018 365,000 586,535 951,535
2019 - 2023 2,030,000 2,735,913 4,765,913
2024 - 2028 2,495,000 2,280,859 4,775,859
2029 - 2033 2,715,000 1,702,676 4,417,676
2034 - 2038 3,330,000 999,625 4,329,625
2039 - 2041 2,430,000 179,897 2,609,897
14,610,000$ 10,928,910$ 25,538,910$
The District’s bonds are payable from the proceeds of an ad valorem tax levied upon all
property within the District subject to taxation, without limitation as to rate or amount.
Long-term liability activity of the West Ranch Management District for the year ended
July 31, 2013, was as follows:
Balance Balance Due
Beginning End of Within One
of Year Increase Decrease Year Year
Component unit
General obligation bonds 8,555,000$ 6,180,000$ (125,000)$ 14,610,000$ 225,000$
Discount on bond issuance (209,123) (73,993) 3,764 (279,352) -
Bond anticipation note 2,665,000 320,000 (2,985,000) - -
Developer advances 40,000 - - 40,000 -
Due to developer 1,826,032 - (1,826,032) - -
Total component unit 12,876,909$ 6,426,007$ (4,932,268)$ 14,370,648$ 225,000$
A developer of the West Ranch Management District has advanced $40,000 to the
District for operating expenses. The District has agreed to repay these amounts plus
interest to the extent approved by the Texas Commission on Environmental Quality from
the proceeds of future bond sales. These amounts have been recorded in the financial
statements as long-term liabilities. The District is currently unable to estimate when
bonds will be issued to pay this liability.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
48
NOTE 7. RESTRICTED ASSETS
The balances of the restricted asset accounts in the enterprise fund are as follows:
Cash and investments:
Customer deposits 350,737$
Construction 176,637
Construction - 2006 bonds 1,659,688
Construction - 2009 bonds 1,041,827
Debt service reserve 702,506
Total restricted assets 3,931,395$
NOTE 8. EMPLOYEE RETIREMENT SYSTEM
Plan Description
The City provides pension benefits for all of its full-time employees through a
non-traditional, joint contributory, hybrid defined benefit plan in the state-wide Texas
Municipal Retirement System (TMRS), an agent multiple-employer public employee
retirement system. The plan provisions that have been adopted by the City are within
the options available in the governing state statutes of TMRS.
TMRS issues a publicly available comprehensive annual financial report that includes
financial statements and required supplementary information (RSI) for TMRS; the report
also provides detailed explanations of the contributions, benefits and actuarial methods
and assumptions used by the System. This report may be obtained from TMRS’ website
at www.TMRS.com.
Benefits
Benefits depend upon the sum of the employee's contributions to the plan, with interest,
and the City-financed monetary credits, with interest. At the date the plan began, the
City granted monetary credits for service rendered before the plan began of a theoretical
amount at least equal to two times what would have been contributed by the employee,
with interest, prior to establishment of the plan. Monetary credits for service since the
plan began are a percent (100%) of the employee's accumulated contributions. In
addition, the City can grant, as often as annually, another type of monetary credit
referred to as an updated service credit, which is a theoretical amount which, when
added to the employee's accumulated contributions and the monetary credits for service
since the plan began, would be the total monetary credits and employee contributions
accumulated with interest if the current employee contribution rate and the City matching
percent had always been in existence and if the employee’s salary had always been the
average of his salary in the last three years that are one year before the effective date.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
49
NOTE 8. EMPLOYEE RETIREMENT SYSTEM – CONTINUED
Benefits – Continued
At retirement, the benefit is calculated as if the sum of the employee's accumulated
contributions with interest and the employer-financed monetary credits with interest were
used to purchase an annuity. Members can retire at ages 60 and above with 5 or more
years of service or with 20 years of service regardless of age. A member is vested after
5 years.
Plan provisions for the City were as follows:
Plan Year Plan Year
2012 2013
Employee deposit rate 7.00% 7.00%
Matching ratio (city to employee) 2 to 1 2 to 1
Years required for vesting 5 5
Service retirement eligibility
(expressed as age / years of 60/5,0/20 60/5,0/20
service)
100% Repeating, 100% Repeating,
Updated Service Credit Transfers Transfers
50% of 50% of
Annuity Increase (to retirees) CPI Repeating CPI Repeating
Contributions
Under the state law governing TMRS, the contribution rate for each city is determined
annually by the actuary, using the Projected Unit Credit actuarial cost method. This rate
consists of the normal cost contribution rate and the prior service cost contribution rate,
which is calculated to be a level percent of payroll from year to year. The normal cost
contribution rate finances the portion of an active member’s projected benefit allocated
annually; the prior service contribution rate amortizes the unfunded (overfunded)
actuarial liability (asset) over the applicable period for that city. Both the normal cost and
prior service contribution rates include recognition of the projected impact of annually
repeating benefits, such as Updated Service Credits and Annuity Increases.
The City contributes to the TMRS Plan at an actuarially determined rate. Both the
employees and the City make contributions monthly. Since the City needs to know its
contribution rate in advance for budgetary purposes, there is a one-year delay between
the actuarial valuation that serves as the basis for the rate and the calendar year when
the rate goes into effect.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
50
NOTE 8. EMPLOYEE RETIREMENT SYSTEM – CONTINUED
Contributions – Continued
The annual pension cost and net pension obligation are as follows:
Annual required contribution (ARC) 1,791,222$
Interest on net pension obligation 44,318
Adjustment to the ARC (38,723)
Annual pension cost (APC) 1,796,817
Contributions made (1,791,222)
Increase in net pension obligation 5,595
Net pension obligation, beginning of year 633,108
Net pension obligation, end of year 638,703$
City historical data is as follows:
Annual Actual Percentage Net Pension
Fiscal Pension Cost Contribution of APC Obligation
Year (APC) Made Contributed at September 30
2011 1,858,285$ 1,761,698$ 94.8% 626,456$
2012 1,780,547 1,773,895 99.6% 633,108
2013 1,796,817 1,791,222 99.7% 638,703
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
51
NOTE 8. EMPLOYEE RETIREMENT SYSTEM – CONTINUED
Contributions – Continued
The required contribution rates for fiscal year 2013 were determined as part of the latest
actuarial valuation, December 31, 2012, as follows:
Valuation date 12/31/2010 12/31/2011 12/31/2012
Actuarial cost method Projected Unit
Credit
Projected Unit
Credit
Projected Unit
Credit
Actuarial assumptions:
Investment rate of return * 7.00% 7.00% 7.00%
* Includes inflation at 3.00% 3.00% 3.00%
Cost-of-living adjustments 0.90% 1.50% 1.50%
Amortization method
GASB 25 Equivalent Single
Amortization Period
Level Percent of
Payroll
Level Percent
of Payroll
Projected salary increases * Varies by age and
service
Varies by age
and service
Asset valuation method 10-year Smoothed
Market
Amortization period for new
gains/losses
Level Percent
of Payroll
25.9 years:
closed period
30 years
10-year Smoothed
Market
Varies by age
and service
27.8 years:
closed period
27.0 years:
closed period
30 years 30 years
10-year Smoothed
Market
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
52
NOTE 8. EMPLOYEE RETIREMENT SYSTEM – CONTINUED
Funded Status and Funding Progress
The funded status as of December 31, 2012 the most recent actuarial valuation date, is
presented as follows:
Actuarial UAAL as a
Actuarial Actuarial Accrued Unfunded Percentage
Valuation Value of Liability Funded AAL Covered of Covered
Date Assets (AAL) Ratio (UAAL) Payroll Payroll
(1) (2) (3) (4) (5) (6)
(1) / (2) (2) - (1) (4) / (5)
12/31/2012 $43,044,755 $52,372,967 82.2% $9,328,212 $11,513,756 81.0%
Actuarial valuations involve estimates of the value of reported amounts and assumptions
about the probability of events far into the future. Actuarially determined amounts are
subject to continual revision as actual results are compared to past expectations and
new estimates are made about the future.
Actuarial calculations are based on the benefits provided under the terms of the
substantive plan in effect at the time of each valuation, and reflect a long-term
perspective. Consistent with that perspective, actuarial methods and assumptions used
include techniques that are designed to reduce short-term volatility in actuarial accrued
liabilities and the actuarial value of assets.
The schedule of funding progress, presented as Required Supplementary Information
following the notes to the financial statements, presents multi-year trend information
about whether the actuarial value of plan assets is increasing or decreasing over time
relative to the actuarial accrued liability of benefits.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
53
NOTE 9. POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS
Retiree Insurance Coverage
The City Council has established a single-employer medical, dental, and vision
insurance defined benefit plan for retirees. Eligible retirees are provided insurance
benefits at a set premium rate equal to the City’s employees’ rate. Eligible retirees may
also cover their dependents. Retirees are responsible for paying the premium cost
associated with their coverage. A retiree is defined as a person who is receiving lifetime
monthly TMRS pension benefit payments and retired directly from active employment at
the City. The City will stop insurance coverage on the retiree and all dependents on the
last day of the month the retiree fails to submit the required premium payment or upon
death of the employee. The retiree health plan does not issue a publicly available
financial report.
Retirement Benefit Eligibility
The retiring employee must be 60 years of age with 5 years of service or have
20 years of service at any age. Employees terminating before normal retirement
conditions are met are not eligible for retiree health plans. Retirees are not required
to enroll in Medicare Parts A and B once eligible.
Plan Participants
Permanent full-time employees and any dependents covered on the employee’s last
date of employment are eligible for coverage. Dependents are not eligible for
coverage unless the retired employee is covered. Should the retiring employee
reject any of the plans, he/she is never eligible to re-enroll in the rejected plans. At
the time of coverage election, the retiring employee has the option of cancelling
coverage on any dependent with the understanding that that dependent can never
be re-enrolled; new dependents cannot be added to the plan.
Medical HMO and/or POS Plan
The retiring employee is eligible to retain whichever medical plan the employee had
on the last day of employment. Any dependents covered at that time may remain on
the retired employee’s plan as long as the retired employee remains active on the
plan. The only time the retiree’s plan choice can be changed is at open enrollment.
All terms and conditions of the plan are the same as active employees.
Dental DMO and/or PPO Plan
The retiring employee is eligible to retain whichever dental plan the employee had on
the last day of employment. Any dependents covered at that time may remain on the
retired employee’s plan as long as the retired employee remains active on the plan.
The only time the retiree’s plan choice can be changed is at open enrollment. All
terms and conditions of the plan are the same as active employees.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
54
NOTE 9. POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS – CONTINUED
Retiree Insurance Coverage – Continued
Vision Plan
The retiring employee is eligible to retain the vision plan the employee had on the
last day of employment. Any dependents covered at that time may remain on the
retired employee’s plan as long as the retired employee remains active on the plan.
All terms and conditions of the plan are the same as active employees.
Premiums Paid
All premiums are 100% paid monthly by the retiree. The City does not contribute to
any of the plans once an employee retires.
Funding Policy and Annual OPEB Cost
The City’s annual other post-employment benefits (OPEB) cost is calculated based
on the annual required contribution of the employer (ARC), an amount actuarially
determined in accordance with the parameters of GASB Statement No. 45. The
ARC represents a level of expense that, if recognized on an ongoing basis, is
projected to cover normal cost each year and to amortize the unfunded actuarial
liabilities over a period not to exceed thirty years. The City’s annual OPEB cost for
the current year is as follows:
Annual required contribution 83,805$
Interest on OPEB obligation 27,729
Adjustment to ARC (25,691)
Annual OPEB cost (expense) end of year 85,843
Net estimated employer contributions 16,309
Increase in net OPEB obligation 69,534
Net OPEB obligation – as of beginning of the year 616,197
Net OPEB obligation – as of end of year 685,731$
City historical data is as follows:
Annual Actual Percentage Net OPEB
Fiscal OPEB Contribution of OPEB Obligation
Year Cost Made Cost Contributed at September 30
2011 83,000$ 46,510$ 56% 576,766$
2012 83,150 43,719 53% 616,197
2013 85,843 16,309 19% 685,731
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
55
NOTE 9. POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS – CONTINUED
Retiree Insurance Coverage – Continued
Funding Status and Funding Progress
The funded status of the City’s retiree health care plan, under GASB Statement
No. 45 as of December 31, 2012, the most recent valuation date, is as follows:
Actuarial UAAL as a
Actuarial Actuarial Accrued Unfunded Percentage
Valuation Value of Liability Funded AAL Covered of Covered
Date Assets (AAL) Ratio (UAAL) Payroll Payroll
(1) (2) (3) (4) (5) (6)
(1) / (2) (2) - (1) (4) / (5)
12/31/2012 $0 $676,248 0.00% $676,248 $11,513,756 5.87%
Under the reporting parameters, the City’s retiree health care plan is 0% funded with
an estimated actuarial accrued liability exceeding actuarial assets by $676,248 at
December 31, 2012. As of the most recent valuation, the ratio of the unfunded
actuarial accrued liability to annual covered payroll is 5.87%.
The schedule of funding progress, presented as Required Supplementary
Information following the notes to the financial statements, presents multi-year trend
information about whether the actuarial value of plan assets is increasing or
decreasing over time relative to the actuarial accrued liability of benefits.
Actuarial Methods and Assumptions
The Projected Unit Credit actuarial cost method is used to calculate the GASB ARC
for the City’s retiree health care plan. Using the plan benefits, the present health
premiums and a set of actuarial assumptions, the anticipated future payments are
projected. The projected unit credit method then provides for a systematic funding
for these anticipated payments. The yearly ARC is computed to cover the cost of
benefits being earned by covered members as well as to amortize a portion of the
unfunded accrued liability.
Projections of health benefits are based on the plan as understood by the City and
include the types of benefits in force at the valuation date and the pattern of sharing
benefit costs between the City and the City’s employees to that point. Actuarial
calculations reflect a long-term perspective and employ methods and assumptions
that are designed to reduce short-term volatility in actuarial accrued liabilities and the
actuarial value of assets.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
56
NOTE 9. POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS – CONTINUED
Retiree Insurance Coverage – Continued
Actuarial Methods and Assumptions – Continued
Significant methods and assumptions were as follows:
Investment rate of return 4.5%, net of expenses
Inflation rate 3.00%
Healthcare cost trend rates 4.5% to 7.5%
Actuarial cost method Projected Unit Credit Cost Method
Amortization method Level Percent of Payroll over an
open period of 30 years
Payroll Growth Rate 3.00%
Actuarial valuations involve estimates of the value of reported amounts and
assumptions about the probability of events in the future. Amounts determined
regarding the funded status and the annual required contributions of the City’s retiree
health care plan are subject to continual revision as actual results are compared to
past expectations and new estimates are made about the future.
Supplemental Death Benefits Fund
Plan Description
The City also participates in the cost sharing multiple-employer defined benefit
group-term life insurance plan operated by the Texas Municipal Retirement System
(TMRS) known as the Supplemental Death Benefits Fund (SDBF). The City elected,
by ordinance, to provide group-term life insurance coverage to both current and
retired employees. The City may terminate coverage under and discontinue
participation in the SDBF by adopting an ordinance before November 1 of any year
to be effective the following January 1.
The death benefit for active employees provides a lump-sum payment approximately
equal to the employee’s annual salary (calculated based on the employee’s actual
earnings, for the 12-month period preceding the month of death); retired employees
are insured for $7,500; this coverage is an “other postemployment benefit,” or OPEB.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
57
NOTE 9. POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS – CONTINUED
Supplemental Death Benefits Fund – Continued
Contributions
The City contributes to the SDBF at a contractually required rate as determined by
an annual actuarial valuation. The rate is equal to the cost of providing one-year
term life insurance. The funding policy for the SDBF program is to assure that
adequate resources are available to meet all death benefit payments for the
upcoming year; the intent is not to pre-fund retiree term life insurance during
employees’ entire careers.
The City’s contributions to the TMRS SDBF for the years ended September 30,
2013, 2012 and 2011 were $19,708, $21,455, and $25,107, respectively, which
equaled the required contributions each year.
NOTE 10. RISK MANAGEMENT
The City is exposed to various risks of loss related to torts; theft of, damage to, and
destruction of assets; errors and omissions; injuries to employees; and natural disasters.
The City’s risk management program encompasses obtaining property and liability
insurance through Texas Municipal League (TML), an Intergovernmental Risk Pool. The
City has not had any significant reduction in insurance coverage and the amounts of
insurance settlements have not exceeded insurance coverage for any of the last three
years. The participation of the City in TML is limited to payment of premiums. During the
year ended September 30, 2013, the City paid premiums to TML for provisions of various
liability, property and casualty insurance. The City has various deductible amounts ranging
from $500 to $5,000 on various policies. At year-end, the City did not have any significant
open claims.
The City also provides workers’ compensation insurance on its employees through TML.
Workers’ compensation is subject to change when audited by TML. At year-end,
September 30, 2013, the City believed the amounts paid on workers’ compensation would
not change significantly from the amounts recorded.
During the year ended September 30, 2013, employees of the City were covered by a health
and dental insurance plan. Employees have the option to select either an HMO or a Point of
Service (POS) plan. If an individual employee chooses to cover only themselves through an
HMO plan, the City pays 90% of the monthly premium. If an individual employee chooses to
cover themselves and their dependents through an HMO plan, the City pays 70% of the
monthly premium. If an employee chooses insurance coverage through the POS plan for
themselves or for themselves and their dependents then the City pays up to 90% or 70%,
respectively, of the HMO plan monthly premium.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
58
NOTE 11. COMMITMENTS AND CONTINGENCIES
Southeast Water Purification Plant
The City has entered into a contract with the City of Houston for constructing, operating
and maintaining a water purification plan known as Southeast Water Purification Plant.
The City’s pro rata share of the actual pumping construction costs is 1.33 percent.
The City began receiving water from the plant on October 15, 1990. The City is billed on
a monthly basis for the actual gallons of water received times the City’s pro rata share of
actual costs. At the end of each quarter, the City of Houston computes the total
operation and maintenance expense for the quarter just ended, recalculates the cost per
one thousand gallons, and adjusts previous billings on the next invoice. As of
September 30, 2013, the City has purchased water capacity with an indefinite life of
$19,716,695.
The relationship of the parties is of a fiduciary character. No partnership or joint venture
is created by this contract.
Federal and State Programs
The City recognizes grant monies received as reimbursement for costs incurred in
certain federal and state programs it administers as revenue. Amounts received or
receivable from grantor agencies are subject to audit and adjustment by grantor
agencies. Any disallowed claims, including amounts already collected, may constitute a
liability of the applicable funds. The amount, if any, of expenditures which may be
disallowed by the grantor cannot be determined at this time although the City expects
such amounts, if any, to be immaterial.
Litigation
The City is a defendant in various lawsuits. The outcome and the impact of these
lawsuits is not presently determinable.
NOTE 12. SUBSEQUENT EVENT
On November 6, 2013, the West Ranch Management District awarded the sale of its Series
2013 unlimited tax bonds in the amount of $1,270,000 at a net effective interest rate of
4.768138 percent. The bonds were sold to fund the District's ongoing construction projects
and reimburse the District's developers.
REQUIRED SUPPLEMENTARY
INFORMATION
(Unaudited)
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF FUNDING PROGRESS FOR PARTICIPATION
IN TEXAS MUNICIPAL RETIREMENT SYSTEM
SEPTEMBER 30, 2013
59
Actuarial Actuarial UAAL as a
Actuarial Value of Accrued Unfunded AAL Covered Percentage of
Valuation Date Assets Liability (AAL) Funded Ratio (UAAL) Payroll Covered Payroll
(1) (2) (3) (4) (5) (6)
(1) / (2) (2) - (1) (4) / (5)
12/31/2010 35,257,370$ 46,008,288$ 76.6% 10,750,918$ 11,160,286$ 96.3%
12/31/2011 39,062,666 49,224,949 79.4 10,162,283 11,521,562 88.2
12/31/2012 43,044,755 52,372,967 82.2 9,328,212 11,513,756 81.0
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF FUNDING PROGRESS
POST EMPLOYMENT BENEFITS PLAN OTHER THAN PENSIONS
SEPTEMBER 30, 2013
60
Actuarial Actuarial UAAL as a
Actuarial Value of Accrued Unfunded AAL Covered Percentage of
Valuation Date Assets Liability (AAL) Funded Ratio (UAAL) Payroll Covered Payroll
(1) (2) (3) (4) (5) (6)
(1) / (2) (2) - (1) (4) / (5)
12/31/2010 -$ 610,795$ 0.0% 610,795$ 11,160,286$ 5.5%
12/31/2011 * - 610,795 0.0 610,795 11,160,286 5.5
12/31/2012 - 676,248 0.0 676,248 11,513,756 5.9
* In accordance with GASB Statement No. 45, the City has an actuarial valuation performed every 2 years,
which was performed as of 12/31/10 and 12/31/12. Therefore data for 2011 is the same as 2010.
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2013
61
Variance With
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues
Property taxes 12,797,240$ 12,797,240$ 13,035,869$ 238,629$
Sales and alcohol taxes 3,934,013 3,934,013 4,318,768 384,755
Franchise taxes 1,496,561 1,496,561 1,583,258 86,697
Fines and forfeitures 1,013,532 1,013,532 904,436 (109,096)
Permits and fees 1,058,095 1,102,899 1,274,218 171,319
Intergovernmental 205,279 260,979 277,503 16,524
Investment earnings 83,796 83,796 81,949 (1,847)
Donations - 84,802 107,329 22,527
Miscellaneous 11,120 12,620 84,673 72,053
Total revenues 20,599,636 20,786,442 21,668,003 881,561
Expenditures
General government
Mayor and council
Supplies 3,421 3,602 2,278 1,324
Other services and charges 264,681 266,000 200,767 65,233
Total mayor and council 268,102 269,602 203,045 66,557
City manager
Personnel services 422,994 427,379 420,931 6,448
Supplies 6,944 8,433 5,342 3,091
Other services and charges 99,112 97,623 67,486 30,137
Total city manager 535,050 539,435 493,759 45,676
City secretary
Personnel services 364,046 369,468 353,165 16,303
Supplies 12,826 11,972 5,999 5,973
Repairs and maintenance 140 511 510 1
Other services and charges 48,273 48,577 27,097 21,480
Total city secretary 425,285 430,528 386,771 43,757
Administrative services
Personnel services 708,748 717,514 716,468 1,046
Supplies 6,592 6,592 4,492 2,100
Other services and charges 197,873 209,728 194,942 14,786
Total administrative services 913,213 933,834 915,902 17,932
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2013
(CONTINUED)
62
Variance With
Final Budget
Actual Positive
Original Final Amounts (Negative)
Human resources
Personnel services 436,983 328,605 295,835 32,770
Supplies 13,555 11,403 9,188 2,215
Other services and charges 58,946 55,974 42,806 13,168
Total human resources 509,484 395,982 347,829 48,153
Tax
Other services and charges 214,478 214,478 181,703 32,775
Total tax 214,478 214,478 181,703 32,775
Economic development
Personnel services 142,396 145,557 146,437 (880)
Supplies 13,325 12,908 4,151 8,757
Other services and charges 101,259 113,853 101,271 12,582
Total economic development 256,980 272,318 251,859 20,459
Municipal court
Personnel services 569,720 573,180 564,291 8,889
Supplies 21,963 18,306 7,111 11,195
Repairs and maintenance 1,480 - - -
Other services and charges 44,986 45,010 26,387 18,623
Total municipal court 638,149 636,496 597,789 38,707
Computer services
Personnel services 345,281 350,386 336,117 14,269
Supplies 10,852 15,651 8,290 7,361
Repairs and maintenance 68,830 68,830 53,793 15,037
Other services and charges 321,128 380,899 305,749 75,150
Capital outlay 16,000 35,600 19,600 16,000
Total computer services 762,091 851,366 723,549 127,817
Risk management
Personnel services 102,238 103,023 100,227 2,796
Supplies 11,879 11,379 4,714 6,665
Other services and charges 14,100 7,599 6,503 1,096
Total risk management 128,217 122,001 111,444 10,557
Total general government 4,651,049 4,666,040 4,213,650 452,390
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2013
(CONTINUED)
63
Variance With
Final Budget
Actual Positive
Original Final Amounts (Negative)
Public safety
Police services
Personnel services 5,959,747 6,001,926 5,885,415 116,511
Supplies 365,178 386,162 370,079 16,083
Repairs and maintenance 138,885 142,892 126,832 16,060
Other services and charges 415,251 433,579 417,173 16,406
Capital outlay 27,571 6,752 79 6,673
Total police services 6,906,632 6,971,311 6,799,578 171,733
Communications
Personnel services 927,698 955,849 962,109 (6,260)
Supplies 5,722 5,982 5,582 400
Repairs and maintenance 17,764 17,098 9,930 7,168
Other services and charges 17,995 29,401 24,757 4,644
Total communications 969,179 1,008,330 1,002,378 5,952
Animal control
Personnel services 237,187 238,148 228,856 9,292
Supplies 26,506 28,432 28,360 72
Repairs and maintenance 2,373 2,902 2,089 813
Other services and charges 41,451 60,739 49,352 11,387
Capital outlay 20,000 20,000 14,798 5,202
Total animal control 327,517 350,221 323,455 26,766
Fire and EMS
Personnel services 568,652 575,080 542,845 32,235
Supplies 38,782 48,607 34,036 14,571
Repairs and maintenance 6,694 5,594 3,340 2,254
Other services and charges 1,338,280 1,332,260 1,309,878 22,382
Total fire and EMS 1,952,408 1,961,541 1,890,099 71,442
Total public safety 10,155,736 10,291,403 10,015,510 275,893
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2013
(CONTINUED)
64
Variance With
Final Budget
Actual Positive
Original Final Amounts (Negative)
Public works
Administration
Personnel services 281,421 283,809 279,332 4,477
Supplies 1,621 1,621 1,277 344
Other services and charges 1,929 1,929 968 961
Total administration 284,971 287,359 281,577 5,782
Streets
Personnel services 516,654 526,602 529,567 (2,965)
Supplies 70,980 72,777 68,052 4,725
Repairs and maintenance 369,300 117,530 592,039 (474,509)
Other services and charges 452,456 453,456 425,901 27,555
Capital outlay 250,000 662,779 162,774 500,005
Total streets 1,659,390 1,833,144 1,778,333 54,811
Drainage
Personnel services 293,567 295,214 289,156 6,058
Supplies 9,435 14,785 10,584 4,201
Repairs and maintenance 39,129 27,504 3,080 24,424
Other services and charges 5,850 8,866 4,220 4,646
Total drainage 347,981 346,369 307,040 39,329
Total public works 2,292,342 2,466,872 2,366,950 99,922
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2013
(CONTINUED)
65
Variance With
Final Budget
Actual Positive
Original Final Amounts (Negative)
Community development
Administration
Personnel services 508,142 519,544 522,470 (2,926)
Supplies 8,621 7,520 5,813 1,707
Repairs and maintenance 637 637 81 556
Other services and charges 10,523 9,350 5,179 4,171
Total administration 527,923 537,051 533,543 3,508
Planning and zoning
Personnel services 212,740 213,293 197,512 15,781
Supplies 1,585 1,093 514 579
Other services and charges 11,804 12,362 11,176 1,186
Total planning and zoning 226,129 226,748 209,202 17,546
Engineering
Personnel services 68,404 59,746 54,062 5,684
Supplies 2,222 2,222 2,082 140
Repairs and maintenance 530 530 77 453
Other services and charges 6,921 15,255 8,029 7,226
Total engineering 78,077 77,753 64,250 13,503
Inspection
Personnel services 398,953 401,941 375,189 26,752
Supplies 13,644 13,174 7,572 5,602
Repairs and maintenance 1,930 3,089 2,349 740
Other services and charges 38,668 36,039 15,159 20,880
Total inspection 453,195 454,243 400,269 53,974
Total community development 1,285,324 1,295,795 1,207,264 88,531
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2013
(CONTINUED)
66
Variance With
Final Budget
Actual Positive
Original Final Amounts (Negative)
Community services
Administration
Personnel services 305,310 304,466 306,030 (1,564)
Supplies 5,066 5,014 4,694 320
Other services and charges 26,814 28,288 27,185 1,103
Total administration 337,190 337,768 337,909 (141)
Parks and recreation
Personnel services 730,335 768,056 716,926 51,130
Supplies 113,357 142,337 130,863 11,474
Repairs and maintenance 134,117 123,098 116,250 6,848
Other services and charges 574,762 656,795 624,406 32,389
Capital outlay 140,200 405,475 187,034 218,441
Total parks and recreation 1,692,771 2,095,761 1,775,479 320,282
Swimming pool
Personnel services 66,046 59,046 49,791 9,255
Supplies 15,199 13,613 11,771 1,842
Repairs and maintenance 8,972 8,128 7,578 550
Other services and charges 31,153 39,459 37,105 2,354
Total swimming pool 121,370 120,246 106,245 14,001
Building operations
Supplies 24,409 30,691 24,057 6,634
Repairs and maintenance 123,217 139,406 122,489 16,917
Other services and charges 568,473 551,655 496,668 54,987
Capital outlay - 142,417 4,680 137,737
Total building operations 716,099 864,169 647,894 216,275
Total community services 2,867,430 3,417,944 2,867,527 550,417
Library
Personnel services 836,422 842,814 833,529 9,285
Supplies 158,113 203,215 148,502 54,713
Repairs and maintenance 1,100 600 297 303
Other services and charges 25,480 27,366 20,473 6,893
Total library 1,021,115 1,073,995 1,002,801 71,194
Total expenditures 22,272,996 23,212,049 21,673,702 1,538,347
Deficiency of
revenues over expenditures (1,673,360) (2,425,607) (5,699) 2,419,908
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2013
(CONTINUED)
67
Variance With
Final Budget
Actual Positive
Original Final Amounts (Negative)
Other financing sources
Proceeds from sale of capital assets - - 27,566 27,566
Proceeds from capital lease - 147,317 147,318 1
Insurance recoveries 32,236 52,855 48,132 (4,723)
Transfers in 1,283,533 1,288,332 1,329,190 40,858
Transfers out - - (27,566) (27,566)
Total other financing sources 1,315,769 1,488,504 1,524,640 36,136
Net change in fund balances (357,591) (937,103) 1,518,941 2,456,044
Fund balance, beginning of year 9,087,219 9,087,219 9,087,219 -
Fund balance, end of year 8,729,628$ 8,150,116$ 10,606,160$ 2,456,044$
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
68
NOTE 1. BUDGETARY CONTROL
The City’s Code of Ordinances establishes the following framework for the preparation and
format of the City’s annual budget:
Content
The budget shall provide a complete financial plan of all City funds and activities and,
except as required by law or this Charter, shall be in such form as the City Manager
deems desirable or the Council may require. The budget shall begin with a clear general
summary of its contents; shall show in detail all estimated income, the proposed property
tax levy, and all proposed expenditures for the ensuing fiscal year, including debt service
and an itemized estimate of the expense of conducting each Department of the City.
The proposed budget expenditures shall not exceed the total of estimated income. It
shall also include, in separate sections:
(1) Tax levies, rates, and collections for the preceding five years.
(2) The amount required for interest on the City's debts, for sinking fund and for
maturing serial bonds.
(3) The total amount of outstanding City debts, with a schedule of maturities on bond
issues.
(4) Anticipated net surplus or deficit for the ensuing fiscal year of each utility owned
or operated by the City and the proposed method of its disposition, subsidiary
budgets for each such utility giving detailed income and expenditure information
shall be attached as appendices to the budget.
(5) A capital program, which may be revised and extended each year to indicate
capital improvements pending or in process of construction or acquisition, and
shall include the following items which shall be attached as appendices to the
budget:
(a) A summary of proposed programs;
(b) A list of all capital improvements which are proposed to be undertaken during
the five fiscal years next ensuing, with appropriate supporting information as
to the necessity for such improvements;
(c) Cost estimates, method of financing and recommended time schedules for
each such improvement; and
(d) The estimated annual cost of operating and maintaining the facilities to bid
constructed or acquired.
(6) Such other information as may be required by the Council.
Submission
On or before the first day of August of each year, the City Manager shall submit to the
Council a proposed budget and an accompanying message. The Council shall review
the proposed budget and revise as deemed appropriate prior to general circulation for
public hearing.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
69
NOTE 1. BUDGETARY CONTROL – CONTINUED
Public Notice and Hearing
The Council shall post in the City Hall and publish in the official newspaper a general
summary of their [its] proposed budget and a notice stating:
(1) The times and places where copies of the message and budget are available for
inspection by the public; and
(2) The time and place, not less than ten nor more than 30 days after such
publication, for a public hearing on the budget.
Amendment Before Adoption
After the public hearing, the Council may adopt the budget with or without amendment.
In amending the budget, it may add or increase programs or amounts and may delete or
decrease any programs or amounts, except expenditures required by law or for debt
service or for estimated cash deficit, provided that no amendment to the budget shall
increase the authorized expenditures to an amount greater than the total of estimated
income plus funds available from prior years.
Adoption
The Council shall adopt its annual budget inclusive of all governmental and proprietary
funds by ordinance, on one reading, by the 15th day of September or as soon thereafter
as practical. The City legally adopts annual budgets for the general, special revenue
and debt service funds. The budgets are adopted on a basis consistent with generally
accepted accounting principles.
If the Council fails to adopt an annual budget before the start of the fiscal year to which it
applies, appropriations of the last budget adopted shall be considered as adopted for the
current fiscal year on a month to month, pro rata basis, until the annual budget is
adopted. Adoption of the budget shall require an affirmative vote of at least a majority of
all members of the Council. Adoption of the budget shall constitute appropriations of the
amounts specified therein as expenditures from the funds indicated.
CITY OF FRIENDSWOOD, TEXAS
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
70
NOTE 1. BUDGETARY CONTROL – CONTINUED
Amendments after Adoption
At any time during the fiscal year, the City Manager may transfer part or all of any
unencumbered appropriation balance among programs within a department, division, or
office, and, upon written request by the City Manager, the Council may by ordinance
transfer part or all of any unencumbered appropriation balance from one department,
office, or agency to another.
No appropriation for debt service may be reduced or transferred and no appropriation
may be reduced below any amount required by law to be appropriated or by more than
the amount of the unencumbered balance thereof. The City Council made supplemental
budgetary appropriation changes during the fiscal year. The reported budgetary data
has been revised for these amendments legally authorized during the year.
COMBINING AND INDIVIDUAL
FUND STATEMENTS AND SCHEDULES
NON MAJOR GOVERNMENTAL FUNDS
71
SPECIAL REVENUE FUNDS
Special revenue funds are used to account for specific revenues that are legally restricted to
expenditures for particular purposes.
Police Investigation Fund – This fund is used to account for revenues that are
restricted to police investigation expenditures.
Fire/EMS Donation Fund – This fund accounts for revenues that are restricted for
Fire/EMS capital outlays and debt repayments.
EDA Grant Fund – This fund is used to account for receipts and expenditures related to
the U.S. Department of Commerce Economic Development Administration grant
awarded to the City in fiscal year 2008-2009.
TDRA Grant Fund – This fund is used to account for receipts and expenditures related
to the Texas Community Development Block Grant awarded to the City in fiscal year
2009-2010.
Park Land Dedication Fund – This fund is used to account for receipts from developers
to build or enhance neighborhood and community parks.
Court Security and Technology Fund – This fund accounts for revenues that are
restricted for court technology and building security. In 1999, the state legislature
authorized a court technology and court security fee for municipal court fines.
CAPITAL PROJECT FUNDS
Capital project funds are used to account for the acquisition and construction of major
capital facilities other than those financed by proprietary funds and trust funds.
Bond Construction Fund – This fund is used to account for the construction of public
safety facilities, and park, streets and drainage improvements that are funded by the
proceeds from Permanent Improvement Bonds.
PERMANENT FUND
The Permanent Fund is used to report resources that are legally restricted to the extent that
only earnings, not principal, may be used for purposes that support the City’s programs.
1776 Park Fund – This fund is used to account for assets held by the City in a trustee
capacity and the earnings benefit this City Park.
CITY OF FRIENDSWOOD, TEXAS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2013 72 Capital Projects PermanentCourt Total NonmajorPolice Fire/EMS EDA TDRA Park Land Security and Bond GovernmentalInvestigation Donation Grant Grant Dedication Technology Construction 1776 Park FundsCash and investments 85,181$ 77,670$ 578,714$ 1,377,684$ 128,193$ 286,062$ 262,642$ 31,114$ 2,827,260$ Receivables, net of allowanceCustomer accounts - 31,271 - - - - - - 31,271 Other 58 33 - - 107 4,804 - 23 5,025 Receivable from other governments 3,000 - 324,293 117,873 - - - - 445,166 Total assets 88,239$ 108,974$ 903,007$ 1,495,557$ 128,300$ 290,866$ 262,642$ 31,137$ 3,308,722$ LIABILITIESAccounts payable 25,498$ 33,232$ 3,007$ - $ - $ - $ - $ - $ 61,737$ Accrued liabilities - - - - - 283 - - 283 Due to other funds - - 900,000 1,495,557 - - - - 2,395,557 Unearned revenue - - - - - 4,567 - - 4,567 Total liabilities 25,498 33,232 903,007 1,495,557 - 4,850 - - 2,462,144 FUND BALANCESNonspendablePermanent fund - - - - - - - 31,137 31,137 RestrictedAuthorized construction - - - - - - 262,642 - 262,642 State and/or federal statute 62,741 - - - - 286,016 - - 348,757 Fire/EMS donations - 75,742 - - - - - - 75,742 City ordinances - - - - 128,300 - - - 128,300 Total fund balances 62,741 75,742 - - 128,300 286,016 262,642 31,137 846,578 Total liabilities and fund balances 88,239$ 108,974$ 903,007$ 1,495,557$ 128,300$ 290,866$ 262,642$ 31,137$ 3,308,722$ ASSETSLIABILITIES AND FUND BALANCESSpecial Revenue Funds
CITY OF FRIENDSWOOD, TEXAS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS YEAR ENDED SEPTEMBER 30, 2013 73 Capital Projects PermanentTotalCourt NonmajorPolice Fire/EMS EDA TDRA Park Land Security and Bond GovernmentalInvestigation Donation Grant Grant Dedication Technology Construction 1776 Park FundsRevenuesFines and forfeitures - $ - $ - $ - $ - $ 34,944$ - $ - $ 34,944$ Permits and fees - - - - 53,700 - - - 53,700 Intergovernmental 97,376 - 77,671 466,091 - - - - 641,138 Investment earnings 371 66 - - 778 1,006 1,429 110 3,760Donations - 256,084 - - - - - - 256,084 Total revenues 97,747 256,150 77,671 466,091 54,478 35,950 1,429 110 989,626 ExpendituresCurrent:General government - - - 42,200 - 14,070 - - 56,270 Public safety 83,958 150,220 - - - - - - 234,178 Capital outlay 59,047 - 77,671 376,488 - 10,813 1,029,762 - 1,553,781 Debt service:Principal - 104,476 - - - - - - 104,476 Interest and fiscal charges - 20,481 - - - - - - 20,481 Total expenditures 143,005 275,177 77,671 418,688 - 24,883 1,029,762 - 1,969,186 Other financing sources (uses)Transfers in - 27,566 - - - - - - 27,566 Transfers out - - - (47,403) (124,155) - - - (171,558) Total other financing sources (uses) - 27,566 - (47,403) (124,155) - - - (143,992) Net change in fund balances (45,258) 8,539 - - (69,677) 11,067 (1,028,333) 110 (1,123,552) Fund balances, beginning of year 107,999 67,203 - - 197,977 274,949 1,290,975 31,027 1,970,130 Fund balances, end of year 62,741$ 75,742$ - $ - $ 128,300$ 286,016$ 262,642$ 31,137$ 846,578$ Special Revenue Funds
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE – BUDGET AND ACTUAL
FIRE/EMS DONATION FUND
YEAR ENDED SEPTEMBER 30, 2013
74
Variance With
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues
Interest income - $ - $ 66$ 66$
Donations 251,000 251,000 256,084 5,084
Total revenues 251,000 251,000 256,150 5,150
Expenditures
Current
Public safety 121,033 121,033 150,220 (29,187)
Debt service
Principal 108,584 108,605 104,476 4,129
Interest and fiscal charges 21,383 21,362 20,481 881
Total expenditures 251,000 251,000 275,177 (24,177)
Excess (deficiency) of revenues
over expenditures - - (19,027) (19,027)
Other financing sources (uses)
Transfers in - - 27,566 27,566
Net change in fund balance - - 8,539 8,539
Fund balance, beginning of year 67,203 67,203 67,203 -
Fund balance, end of year 67,203$ 67,203$ 75,742$ 8,539$
Budgeted Amounts
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE – BUDGET AND ACTUAL
DEBT SERVICE FUND
YEAR ENDED SEPTEMBER 30, 2013
75
Variance With
Final Budget
Actual Positive
Original Final Amounts (Negative)
Revenues
Property taxes 1,611,174$ 1,611,174$ 1,625,953$ 14,779$
Interest income 2,358 2,358 1,621 (737)
Total revenues 1,613,532 1,613,532 1,627,574 14,042
Expenditures
Debt service
Principal 1,597,752 1,617,509 1,617,507 2
Interest and fiscal charges 695,699 693,137 692,341 796
Total expenditures 2,293,451 2,310,646 2,309,848 798
Excess (deficiency) of revenues
over expenditures (679,919) (697,114) (682,274) 14,840
Other financing sources (uses)
Transfers in 616,350 616,350 616,350 -
Total other financing sources 616,350 616,350 616,350 -
Net change in fund balance (63,569) (80,764) (65,924) 14,840
Fund balance, beginning of year 245,752 245,752 245,752 -
Fund balance, end of year 182,183$ 164,988$ 179,828$ 14,840$
Budgeted Amounts
STATISTICAL SECTION
(Unaudited)
This part of the City of Friendswood, Texas’ comprehensive annual financial report
presents detailed information as a context for understanding what the information in the
financial statements, note disclosures, and required supplementary information says about
the government’s overall financial health.
FINANCIAL TRENDS INFORMATION - information to help the reader understand how the City's
financial performance and well-being have changed over time.
1 Net position by component
2 Changes in net position
3 Fund balances, governmental funds
4 Changes in fund balances, governmental funds
REVENUE CAPACITY INFORMATION - information to help the reader assess the City's most
significant local revenue source, the property tax.
5 Assessed value and taxable value of property
6 Direct and overlapping property tax rates
7 Principal property tax payers
8 Property tax levies and collections
DEBT CAPACITY INFORMATION - information to help the reader assess the affordability of the
City's current levels of outstanding debt and the City's ability to issue additional debt in the future.
9 Ratios of outstanding debt by type
10 Ratios of net general bonded debt outstanding
11 Direct and overlapping governmental activities debt
12 Legal debt margin information
13 Pledged-revenue coverage
DEMOGRAPHIC AND ECONOMIC INFORMATION - information to help the reader understand the
environment within which the City's financial activities take place, and to help make comparisons over
time and with other governments.
14 Demographic and economic statistics
15 Principal employers
OPERATING INFORMATION - service and infrastructure data to help the reader understand how the
information in the City's financial report relates to the services the City provides and the activities it
performs.
16 Full-time equivalent city government employees by function/program
17 Operating indicators by function/program
18 Capital asset statistics by function/program
Sources: Unless otherwise noted, the information in these schedules is derived from the
comprehensive annual financial reports for the relevant year.
STATISTICAL SECTION
(Unaudited)
76 Table 1City of FriendswoodNet Position by ComponentLast Ten Fiscal Years(accrual basis of accounting)(unaudited)2004 2005 2006 2007 2008 2009 2010 2011 2012 2013Governmental activitiesNet investment in capital assets 29,632,831$ 32,533,863$ 32,849,446$ 71,777,140$ 70,591,236$ 69,313,348$ 70,480,334$ 66,580,049$ 65,582,783$ 65,056,180$ Restricted 1,271,568 1,576,829 2,034,157 2,391,482 2,773,910 2,461,510 1,977,801 922,874 872,869 718,275 Unrestricted 7,125,997 7,527,573 10,391,123 10,785,998 10,548,129 9,892,077 8,447,179 8,227,254 8,828,132 9,565,406 Total governmental activities net position 38,030,396$ 41,638,265$ 45,274,726$ 84,954,620$ 83,913,275$ 81,666,935$ 80,905,314$ 75,730,177$ 75,283,784$ 75,339,861$ Business-type activitiesNet investment in capital assets 17,174,525$ 16,823,526$ 16,815,130$ 16,884,376$ 20,375,620$ 21,122,644$ 19,565,756$ 26,251,346$ 25,618,823$ 22,961,547$ Restricted 444,548 445,086 41,057 162,218 27,246 93,526 593,597 731,410 786,600 176,882 Unrestricted 4,337,137 5,228,802 6,574,920 7,475,597 4,227,253 6,730,812 8,677,882 11,373,311 13,032,798 16,790,183 Total business-type activities net position 21,956,210$ 22,497,414$ 23,431,107$ 24,522,191$ 24,630,119$ 27,946,982$ 28,837,235$ 38,356,067$ 39,438,221$ 39,928,612$ Primary governmentNet investment in capital assets 46,807,356$ 49,357,389$ 49,664,576$ 88,661,516$ 90,966,856$ 90,435,992$ 90,046,090$ 92,831,395$ 91,201,606$ 88,017,727$ Restricted 1,716,116 2,021,915 2,075,214 2,553,700 2,801,156 2,555,036 2,571,398 1,654,284 1,659,469 895,157 Unrestricted 11,463,134 12,756,375 16,966,043 18,261,595 14,775,382 16,622,889 17,125,061 19,600,565 21,860,930 26,355,589 Total primary government net position 59,986,606$ 64,135,679$ 68,705,833$ 109,476,811$ 108,543,394$ 109,613,917$ 109,742,549$ 114,086,244$ 114,722,005$ 115,268,473$ Fiscal Year
77 Table 2City of FriendswoodChanges in Net PositionLast Ten Fiscal Years(accrual basis of accounting)(unaudited)2004 2005 2006 2007 2008 2009 2010 2011 2012 2013ExpensesGovernmental activities:General government 3,375,283$ 3,438,849$ 3,330,439$ 4,472,602$ 4,339,620$ 5,164,623$ 5,145,447$ 4,876,064$ 4,737,702$ 4,679,339$ Public safety 6,026,272 7,318,886 7,060,800 7,565,797 12,652,812 14,929,941 10,175,028 10,548,568 10,736,805 10,800,130 Community development and public works 2,569,356 2,576,447 2,813,857 5,475,447 4,921,298 5,292,000 - - - - Public works - - - - - - 3,853,685 3,517,707 3,738,111 4,385,090 Community development - - - - - - 1,203,204 1,284,188 1,520,401 1,207,264 Community services 3,081,717 3,075,023 3,098,013 3,420,244 3,841,387 4,002,165 3,034,523 3,058,313 3,227,731 3,260,931 Library - - - - - - 979,084 979,978 1,004,303 1,002,801 Interest and fiscal charges 465,770 478,495 857,602 835,511 803,733 678,705 789,652 871,790 757,011 703,275 Total governmental activities expenses 15,518,398 16,887,700 17,160,711 21,769,601 26,558,850 30,067,434 25,180,623 25,136,608 25,722,064 26,038,830 Business-type activities:Water and sewer 5,614,077 6,251,251 6,078,881 5,711,063 6,523,501 6,640,062 6,663,308 6,955,505 6,902,279 7,681,366 Interest and fiscal charges 999,219 963,355 962,989 1,583,551 1,543,859 1,604,174 2,037,104 1,644,074 1,638,495 1,590,395 Total business-type activities expenses 6,613,296 7,214,606 7,041,870 7,294,614 8,067,360 8,244,236 8,700,412 8,599,579 8,540,774 9,271,761 Total primary government expenses 22,131,694 24,102,306 24,202,581 29,064,215 34,626,210 38,311,670 33,881,035 33,736,187 34,262,838 35,310,591 Program RevenuesGovernmental activities: Charges for services General government 958,665 1,176,086 1,238,631 1,353,160 1,178,523 1,327,484 1,072,289 1,158,392 1,167,619 989,190 Public safety 9,141 15,013 54,653 23,267 21,356 46,773 38,438 39,914 39,661 34,944 Community development and public works 822,927 758,487 805,710 998,625 838,060 602,265 - - - - Public works - - - - - - 152,163 158,858 171,890 186,504 Community development - - - - - - 550,286 643,150 730,211 825,366 Community services 65,850 66,281 112,681 219,944 132,244 411,207 258,030 267,837 271,912 316,047 Library - - - - - - 44,313 43,147 38,543 36,686 Operating grants and contributions 778,261 1,271,119 771,477 489,707 4,021,908 5,755,038 2,819,418 3,150,808 648,058 644,458 Capital grants and contributions 239,200 235,300 - - - - - - 527,288 543,763 Total governmental activities program revenues 2,874,044 3,522,286 2,983,152 3,084,703 6,192,091 8,142,767 4,934,937 5,462,106 3,595,182 3,576,958 Business-type activities:Charges for services Water and sewer 7,203,736 8,390,761 8,392,277 8,021,040 8,624,546 12,028,895 9,854,083 12,726,936 11,258,216 11,462,779 Total business-type activities program revenues 7,203,736 8,390,761 8,392,277 8,021,040 8,624,546 12,028,895 9,854,083 12,726,936 11,258,216 11,462,779 Total primary government program revenues 10,077,780 11,913,047 11,375,429 11,105,743 14,816,637 20,171,662 14,789,020 18,189,042 14,853,398 15,039,737 Net (Expense)/RevenuesGovernmental activities (12,644,354) (13,365,414) (14,177,559) (18,684,898) (20,366,759) (21,924,667) (20,245,686) (19,674,502) (22,126,882) (22,461,872) Business-type activities 590,440 1,176,155 1,350,407 726,426 557,186 3,784,659 1,153,671 4,127,357 2,717,442 2,191,018 Total primary government net expense (12,053,914)$ (12,189,259)$ (12,827,152)$ (17,958,472)$ (19,809,573)$ (18,140,008)$ (19,092,015)$ (15,547,145)$ (19,409,440)$ (20,270,854)$(Continued)Fiscal Year
78 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013General Revenues and Other Changes in Net PositionGovernmental activities:Taxes Property 10,931,393$ 11,352,598$ 11,304,684$ 11,876,246$ 12,512,950$ 13,481,500$ 13,664,765$ 13,944,725$ 14,165,599$ 14,630,961$ Sales 1,119,328 3,199,136 3,658,699 3,904,436 3,767,526 3,871,995 3,853,161 4,002,740 3,907,577 4,293,794 Franchise 2,833,290 1,176,460 1,220,581 1,239,167 1,317,166 1,363,221 1,510,794 1,598,407 1,556,556 1,583,258 Other 71,028 53,790 11,940 16,186 25,429 28,859 28,859 28,883 23,356 24,974 Investment earnings 219,085 376,435 915,710 1,063,715 648,301 166,492 93,018 110,863 137,202 88,510 Gain (loss) on sale of capital assets - - - 345,976 - 4,320 33,647 23,831 17,601 43,788 Miscellaneous - 51,503 21,556 4,152 73,026 214,484 131,545 126,228 147,457 78,682 Transfers 714,278 763,361 680,850 875,616 981,016 547,456 168,276 (5,336,312) 1,725,141 1,773,982 Total governmental activities 15,888,402 16,973,283 17,814,020 19,325,494 19,325,414 19,678,327 19,484,065 14,499,365 21,680,489 22,517,949 Business-type activities:Investment earnings 59,869 114,932 262,761 1,236,092 531,758 128,338 87,056 55,163 82,853 37,565 Gain (loss) on sale of capital assets - - - - - (48,678) (182,198) - 7,000 - Miscellaneous - 13,478 1,375 4,182 - - - - - 35,790 Extraordinary item - - - - - - - - - - Transfers (714,278) (763,361) (680,850) (875,616) (981,016) (547,456) (168,276) 5,336,312 (1,725,141) (1,773,982) Total business-type activities (654,409) (634,951) (416,714) 364,658 (449,258) (467,796) (263,418) 5,391,475 (1,635,288) (1,700,627) Total primary government 15,233,993 16,338,332 17,397,306 19,690,152 18,876,156 19,210,531 19,220,647 19,890,840 20,045,201 20,817,322 Change in Net PositionGovernmental activities 3,244,048 3,607,869 3,636,461 640,596 (1,041,345) (2,246,340) (761,621) (5,175,137) (446,393) 56,077 Business-type activities (63,969) 541,204 933,693 1,091,084 107,928 3,316,863 890,253 9,518,832 1,082,154 490,391 Total primary government 3,180,079$ 4,149,073$ 4,570,154$ 1,731,680$ (933,417)$ 1,070,523$ 128,632$ 4,343,695$ 635,761$ 546,468$ (Concluded)Note:Community Development and Publics Works were shown as one department from 2004 to 2009. From 2004 to 2009, the Library was included with Community Services. Fiscal Year
79 Table 3City of FriendswoodFund Balances, Governmental FundsLast Ten Fiscal Years(modified accrual basis of accounting)(unaudited)2004 2005 2006 2007 2008 2009 2010 2011 2012 2013General FundReserved 635,182$ 511,197$ 1,313,829$ 601,646$ 1,037,279$ 686,404$ 1,731,056$ -$ -$ -$ Unreserved 5,971,319 7,032,843 8,973,646 9,926,479 9,177,390 9,185,590 7,399,217 - - - Nonspendable - - - - - - - 220,151 99,874 122,927 Restricted - - - - - - - 97,728 173,015 281,826 Assigned - - - - - - - 1,085,527 434,931 487,201 Unassigned - - - - - - - 7,511,998 8,379,399 9,714,206 Total general fund 6,606,501 7,544,040 10,287,475 10,528,125 10,214,669 9,871,994 9,130,273 8,915,404 9,087,219$ 10,606,160$ All Other Governmental FundsReserved 829,701$ 1,395,767$ 4,220,225$ 3,575,592$ 2,310,481$ 1,385,265$ 667,682$ -$ -$ -$ Unreserved, reported in: - - - - - - - - - - Special revenue funds 411,229 175,192 404,749 558,653 643,223 1,075,343 1,328,145 - - - Capital projects funds 5,171,662 8,584,781 3,943,654 1,957,116 323,597 326,600 - - - - Permanent fund 25,587 26,292 27,477 28,901 30,070 30,507 30,720 - - - Nonspendable - - - - - - - 30,869 31,027 31,137 Restricted - - - - - - - 4,162,423 2,184,855 995,269 Total all other governmental funds 6,438,179$ 10,182,032$ 8,596,105$ 6,120,262$ 3,307,371$ 2,817,715$ 2,026,547$ 4,193,292$ 2,215,882$ 1,026,406$ Note: In fiscal year 2011, the City implemented GASB 54 which changed the fund balance classifications to nonspendable, restricted, committed, assigned and unassigned. Fiscal Year
80 Table 4City of FriendswoodChanges in Fund Balances, Governmental FundsLast Ten Fiscal Years(modified accrual basis of accounting)(unaudited)2004200520062007200820092010201120122013RevenuesTaxes 14,843,855$ 15,779,126$ 16,190,756$ 16,961,818$ 17,606,273$ 18,763,998$ 19,104,625$ 19,592,092$ 19,630,172$ 20,563,848$ Fines and penalties 879,369 1,112,916 1,163,984 1,288,794 1,161,903 1,143,102 1,043,126 1,012,592 1,037,880 939,380 Licenses and permits 807,041 717,607 769,352 1,017,502 944,756 966,797 960,479 1,069,845 1,174,013 1,327,918 Intergovernmental 795,325 985,339 535,074 248,702 3,801,013 5,794,303 2,652,037 3,109,645 1,077,890 918,641 Investment earnings 218,419 375,123 906,552 1,054,698 639,402 161,106 90,337 109,272 135,483 87,330 Donations 215,535 213,381 219,353 229,939 265,535 272,911 280,223 276,209 306,119 363,413 Other revenues 152,616 414,923 277,995 279,788 37,876 34,448 81,366 78,243 41,410 84,673 Total revenues 17,912,160 19,598,415 20,063,066 21,081,241 24,456,758 27,136,665 24,212,193 25,247,898 23,402,967 24,285,203 ExpendituresGeneral government 3,249,965 3,420,274 3,315,844 4,605,245 4,114,662 4,178,062 4,224,384 4,397,858 4,322,631 4,250,320 Public safety 5,810,503 7,127,975 6,903,806 7,482,603 12,404,745 14,717,404 9,799,372 10,093,964 10,201,010 10,234,811 Community development and public works 2,511,125 2,436,359 2,579,398 3,600,798 3,045,904 3,406,881 - - - - Public works - - - - - - 1,956,479 1,637,237 1,702,119 2,204,176 Community development - - - - - - 1,208,899 1,284,188 1,520,401 1,207,264 Community services 2,655,315 2,626,329 2,630,094 2,866,388 3,266,250 3,439,475 2,458,422 2,472,015 2,622,970 2,675,813 Library - - - - - - 979,084 979,978 1,004,303 1,002,801 Capital outlay 4,033,197 7,040,173 4,292,854 3,711,569 4,339,546 2,489,845 3,799,303 4,254,582 3,705,622 1,942,746 Debt principal payment 469,930 459,422 608,184 658,073 774,584 787,293 787,590 1,065,865 1,562,088 1,721,983 Interest and fiscal agent charges 476,207 594,076 757,402 739,487 704,136 691,638 773,744 864,746 768,329 712,822 Bond issuance costs and fees - - - - - - - 200,227 131,380 - Total expenditures 19,206,242 23,704,608 21,087,582 23,664,163 28,649,827 29,710,598 25,987,277 27,250,660 27,540,853 25,952,736 Excess of revenuesunder expenditures(1,294,082) (4,106,193) (1,024,516) (2,582,922) (4,193,069) (2,573,933) (1,775,084) (2,002,762) (4,137,886) (1,667,533) Other Financing Sources (Uses)Sale of capital assets - - 187,345 785,942 22,600 - 23,340 8,992 9,250 27,566 Insurance recoveries - - - - 63,106 123,707 50,579 45,334 105,502 48,132 Issuance of debt - 8,024,224 - - - - - 3,460,000 8,890,000 - Capital lease proceeds - - - - - 1,133,460 - - 464,270 147,318 Refunding bonds issued - - - - - - - 5,460,000 - - Payment to refunding bond escrow agent - - - - - - - - (9,425,538) - Premium on issuance of debt - - - - - - - 317,452 563,666 - Transfer in 853,073 923,361 904,955 1,226,304 992,586 2,098,405 1,512,987 1,235,892 1,970,819 1,973,106 Transfer out (138,795) (160,000) (224,105) (350,688) (11,570) (1,613,970) (1,344,711) (6,573,032) (245,678) (199,124) Total other financing sources (uses) 714,278 8,787,585 868,195 1,661,558 1,066,722 1,741,602 242,195 3,954,638 2,332,291 1,996,998 Net change in fund balance(579,804)$ 4,681,392$ (156,321)$ (921,364)$ (3,126,347)$ (832,331)$ (1,532,889)$ 1,951,876$ (1,805,595)$ 329,465$ Debt service as a percentage of noncapital expenditures 6.2% 6.3% 8.1% 7.0% 6.1% 5.4% 7.0% 8.4% 9.8% 10.1%Note:From 2004 to 2009, Public Works and Community Development were combined as one department. Beginning in 2010, they are shown as separate departments.In 2002, the City adopted a Financial Policy. Based on this policy, undesignated fund balance shall be allowed to accumulate to establish a 90-day operating reserve.After the reserve is established, additional undesignated funds are allowed to accumulate for future capital projects.Fiscal Year
81 Table 5City of FriendswoodAssessed Value and Taxable Value of PropertyLast Ten Fiscal Years(Unaudited)Less: TotalCommercial Total Exemptions and Total DirectFiscal Tax Residential and Industrial Other Assessed Tax Exempt Taxable TaxYearYear Property Property PropertyValue PropertyValue Rate2004 2003 1,773,557,635$ 202,586,683$ 202,516,869$ 2,178,661,187$ 496,157,461$ 1,682,503,726$ 0.63850 2005 2004 1,882,823,995 211,269,120 189,513,770 2,283,606,885 532,056,903 1,751,549,982 0.63850 2006 2005 1,998,747,285 217,285,258 183,010,440 2,399,042,983 557,521,388 1,841,521,595 0.60400 2007 2006 2,163,006,305 260,809,119 215,897,086 2,639,712,510 622,333,722 2,017,378,788 0.58210 2008 2007 2,305,398,212 266,240,487 223,856,148 2,795,494,847 642,347,609 2,153,147,238 0.57640 2009 2008 2,443,040,835 271,618,942 254,262,180 2,968,921,957 672,410,955 2,296,511,002 0.57970 2010 2009 2,509,894,027 277,693,532 248,910,248 3,036,497,807 695,681,434 2,340,816,373 0.57970 2011 2010 2,547,883,315 276,080,104 235,256,040 3,059,219,459 703,419,784 2,355,799,675 0.58510 2012 2011 2,584,070,993 280,043,373 230,531,859 3,094,646,225 706,059,683 2,388,586,542 0.59020 2013 2012 2,622,105,658 286,288,277 235,960,049 3,144,353,984 710,718,423 2,433,635,561 0.59700 Source: Galveston County Tax Assessor/Collector and City of Friendswood records.Note: Property in the City of Friendswood is reassessed once every two years on average. (Source: Galveston Central Appraisal District)Tax rates per $100 of assessed value.Residential property includes both single-family and multi-family properties.
82 Table 6City of FriendswoodDirect and Overlapping Property Tax RatesLast Ten Fiscal Years(unaudited)(rate per $100 of assessed value)FiscalYear Friendswood Clear Creek Galveston CountyEnded Debt Total Independent Independent Drainage Galveston HarrisSeptember 30, General Service Direct School District School District District CountyCounty2004 0.5547$ 0.0838$ 0.6385$ 1.6370$ 1.7300$ 0.1500$ 0.6063$ 0.63998$ 2005 0.5547 0.0838 0.6385 1.6370 1.7450 0.1483 0.6388 0.63998 2006 0.5243 0.0797 0.6040 1.5070 1.7750 0.1450 0.5874 0.63998 2007 0.5120 0.0701 0.5821 1.5700 1.6300 0.1450 0.5874 0.63998 2008 0.5016 0.0748 0.5764 1.1770 1.3200 0.1425 0.5686 0.62998 2009 0.5097 0.0700 0.5797 1.3670 1.3600 0.1425 0.5586 0.62998 2010 0.4997 0.0800 0.5797 1.3670 1.3600 0.1425 0.6186 0.62998 2011 0.5198 0.0653 0.5851 1.3670 1.3600 0.1425 0.6198 0.62998 2012 0.5218 0.0684 0.5902 1.3670 1.3600 0.1400 0.6129 0.62998 2013 0.5307 0.0663 0.5970 1.3670 1.3600 0.1400 0.5999 0.62998 Source: Galveston County Tax Assessor/Collector and City of Friendswood records.Note:Overlapping rates are those of local and county governments that apply to property owners within the City of Friendswood. Not all overlapping rates applyto all property owners. Overlapping rates for Friendswood Independent School District, Galveston County Consolidated Drainage District and GalvestonCounty apply only to residents whose property is in Galveston County. Overlapping rates for Clear Creek Independent School District and Harris Countyapply only to residents whose property is in Harris County.City Direct Rates Overlapping Rates
83
Table 7
City of Friendswood
Principal Property Tax Payers
Current Year and Nine Years Ago
(Unaudited)
Percentage Percentage
of Total City of Total City
Taxable Taxable
Taxable Assessed Taxable Assessed
Taxpayer Value Rank Value Value Rank Value
Reserve at Autumn Crk Ltd 17,486,069$ 1 0.72% 10,726,040$ 3 0.64%
Kroger Co. 13,606,816 2 0.56% 7,410,080 6 0.44%
Texas-New Mexico Power Co. 11,212,150 3 0.46% 10,580,860 4 0.63%
Autumn Creek Dev LTD 9,396,550 4 0.39% 6,855,450 9 0.41%
G&I VI Sky Hawk LP 8,856,988 5 0.36% - -
H.E. Butt Grocery Company 8,149,920 6 0.33% 7,117,370 7 0.42%
HCP Friendswood LLC 6,995,240 7 0.29% - -
HSRE Friendswood LLC 5,995,130 8 0.25% - -
A-S 108 Friendswood Crossing LP 5,858,350 9 0.24% -
Buzbee Family LTD Partnership 5,367,560 10 0.22% - -
Southwestern Bell Telephone Co. - - 12,945,490 1 0.77%
Blackhawk Apartments - - 12,268,200 2 0.73%
Southwest Properties - - 8,899,990 5 0.53%
Friendswood Retirement 7,030,600 8 0.42%
Texas HCP Holding LP - - 6,457,140 10 0.38%
Total 92,924,773 3.82% 90,291,220 5.37%
All other taxpayers 2,340,710,788 96.18% 1,592,212,506 94.63%
2,433,635,561$ 100.00% 1,682,503,726$ 100.00%
Source: Galveston Central Appraisal District and Harris County Appraisal District
2013 2004
84
Table 8
City of Friendswood
Property Tax Levies and Collections
Last Ten Fiscal Years
(Unaudited)
Fiscal Collections
Year Taxes Levied (adjustments)
Ended for the Percentage in Subsequent Percentage
September 30, Fiscal Year Amount of Levy Years Amount of Levy
2004 10,785,308$ 10,630,820$ 98.57% 146,625$ 10,777,445$ 99.93%
2005 11,221,282 11,078,265 98.73% 134,877 11,213,142 99.93%
2006 11,151,572 11,019,314 98.81% 136,749 11,156,063 100.04%
2007 11,740,541 11,532,882 98.23% 198,268 11,724,675 99.86%
2008 12,351,183 12,193,715 98.73% 219,147 12,412,862 100.50%
2009 13,230,005 13,113,928 99.12% 174,466 13,288,394 100.44%
2010 13,482,173 13,395,543 99.36% 118,608 13,514,151 100.24%
2011 13,680,511 13,608,076 99.47% 89,680 13,697,756 100.13%
2012 13,984,872 13,916,558 99.51% 98,004 14,014,562 100.21%
2013 14,415,212 14,361,379 99.63% - 14,361,379 99.63%
Source: Galveston County Tax Assessor/Collector and City of Friendswood records.
Note:Percentage of levy collected to date exceeds taxes levied for some fiscal years due to adjustments
made to the tax levy in subsequent years. Taxes levied per this schedule represent
the original taxes levied, while collections include amounts related to adjustments.
Collected within the
Fiscal Year of the Levy Total Collections to Date
85 Table 9City of FriendswoodRatios of Outstanding Debt by TypeLast Ten Fiscal Years(Unaudited)General Certificates General Certificates Water Total Percentage ofFiscal Obligation of Revenue Capital Obligation of Revenue Primary Personal PerYearBonds Obligation Bonds Leases Bonds Obligation Bonds Government Income Capita 2004 10,059,865$ -$ -$ 362,154$ 1,830,135$ 2,535,000$ 14,160,000$ 28,947,154$ 0.33% 848$ 2005 17,590,000 - - 237,597 3,310,000 470,000 14,020,000 35,627,597 0.39% 1,040 2006 17,150,000 - - 168,957 2,855,000 280,000 30,665,000 51,118,957 0.50% 1,490 2007 16,660,000 - - 96,380 2,375,000 50,000 30,515,000 49,696,380 0.46% 1,430 2008 16,065,000 - - 16,351 1,680,000 - 30,355,000 48,116,351 0.41% 1,355 2009 15,445,000 - - 982,518 865,000 - 42,260,000 59,552,518 0.50% 1,582 2010 14,800,000 - - 839,928 - - 42,045,000 57,684,928 0.47% 1,516 2011 22,885,000 - - 710,023 - - 35,205,000 58,800,023 0.46% 1,579 2012 21,605,000 - - 975,726 - - 34,115,000 56,695,726 0.42% 1,498 2013 20,230,000 - - 876,981 - - 32,995,000 54,101,981 N/A 1,410 Notes:Details regarding the City's outstanding debt can be found in the notes to the financial statements.See Table 14 for personal income and population data. These ratios are calculated using personal income and population for the prior calendar year.Personal income data provided on Table 14 is for the County of Galveston. Data was not available specific to the City of Friendswood and therefore is notincluded on this table.N/A - Information is not available.Governmental Activities Business-Type Activities
86 Table 10City of FriendswoodRatios of Net General Bonded Debt OutstandingLast Ten Fiscal Years(Unaudited)General Less Debt Net Percentage ofFiscal Taxable Obligation Service General Taxable Value PerYear Population Value Bonds Funds Bonded DebtProperty Capita 2004 34,152 1,682,503,726$ 10,059,865$ 834,752$ 9,225,113$ 0.55% 270$ 2005 34,272 1,751,549,982 17,590,000 1,375,345 16,214,655 0.93% 473 2006 34,306 1,841,521,595 17,150,000 1,576,724 15,573,276 0.85% 454 2007 34,759 2,017,378,788 16,660,000 1,803,928 14,856,072 0.74% 427 2008 35,500 2,153,147,238 16,065,000 2,100,617 13,964,383 0.65% 393 2009 37,653 2,296,511,002 15,445,000 952,951 14,492,049 0.63% 385 2010 38,057 2,340,816,373 14,800,000 545,676 14,254,324 0.61% 375 2011 37,247 2,355,799,675 22,885,000 240,869 22,644,131 0.96% 608 2012 37,839 2,388,586,542 21,605,000 193,714 21,411,286 0.90% 566 2013 38,369 2,433,635,561 20,230,000 134,339 20,095,661 0.83% 524 Note:Details regarding the City's outstanding debt can be found in the notes to the financial statements.General Bonded Debt Outstanding
87
Table 11
City of Friendswood
Direct and Overlapping Governmental Activities Debt
As of September 30, 2013
(Unaudited)
Estimated
Estimated Share of
Debt Percentage Overlapping
Governmental Unit Outstanding Applicable Debt
Debt repaid with property taxes
Friendswood Independent School District 109,315,000$ 100.00% 111,019,978$
Clear Creek Independent School District 640,488,061 3.159% 20,229,815
Galveston County 298,963,000 5.38% 16,096,168
Harris County 3,386,319,000 0.506% 17,148,319
Subtotal, overlapping debt 164,494,280
City direct debt 21,106,981
Total direct and overlapping debt 185,601,261$
Sources: Information was obtained from either the governmental unit's website or the finance department of the
governmental unit.
Notes: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City.
This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne
by the residents and businesses of the City of Friendswood. The City’s share of the debt of the overlapping
governments is based on the ratio of the assessed value of the City’s own property to that of each of the
other governments. This process recognizes that, when considering the City's ability to issue and repay
long-term debt, the entire debt burden borne by the residents and businesses should be taken into account.
However, this does not imply that every taxpayer is a resident--and therefore responsible for repaying the
debt--of each overlapping government.
88
Table 12
City of Friendswood
Legal Debt Margin Information
(Unaudited)
As a City Council-City Manager form of government, the City of Friendswood is not limited by law in the amount
of debt it may issue. The City's charter states:
"In keeping with the Constitution of the State of Texas and not contrary thereto, the City of Friendswood
shall have the power to borrow money on the credit of the City for any public purpose not now or hereafter
prohibited by the Constitution and laws of the State of Texas, and shall have the right to issue all tax bonds,
revenue bonds, funding and refunding bonds, time warrants and other evidence of indebtedness as now
authorized or as may hereafter be authorized to be issued by cities and towns by the laws of the State of
Texas."
Article 11, Section 5 of the State of Texas Constitution states in part:
"but no tax for any purpose shall ever be lawful for any one year, which shall exceed two and one-half percent
of the taxable property of such city"
The tax rate for fiscal year ended September 30, 2013, is $.597 per $100 of assessed valuation with assessed
valuation being 100% of market value.
89
Table 13
City of Friendswood
Pledged-Revenue Coverage
Last Ten Fiscal Years
(Unaudited)
Utility Less: Net
Fiscal Service Operating Available Debt Service
Year Charges Expenses Revenue Principal Interest Coverage
2004 7,203,736$ 4,238,810$ 2,964,926$ 25,000$ 769,936$ 3.73$
2005 8,390,761 4,769,885 3,620,876 140,000 766,788 3.99
2006 8,392,277 4,660,868 3,731,409 160,000 445,351 6.16
2007 8,021,040 4,338,819 3,682,221 150,000 1,441,234 2.31
2008 8,624,546 5,143,516 3,481,030 160,000 1,416,465 2.21
2009 12,028,895 5,249,388 6,779,507 215,000 1,986,015 3.08
2010 9,854,083 5,184,330 4,669,753 215,000 1,904,689 2.20
2011 12,726,936 5,410,497 7,316,439 1,440,000 1,640,437 2.38
2012 11,258,216 5,361,567 5,896,649 1,090,000 1,589,565 2.20
2013 11,462,779 6,113,276 5,349,503 1,120,000 1,548,303 2.00
Notes:Details regarding the City's outstanding debt can be found in the notes to the financial statements.
Operating expenses do not include interest, depreciation or amortization expenses.
Waterworks and Sewer Revenue Bonds
90
Table 14
City of Friendswood
Demographic and Economic Statistics
Last Ten Calendar Years
(Unaudited)
Per
Capita
Calendar Estimated Personal Personal Unemployment
Year Population Income Income Rate
2004 34,152 8,719,688,000$ 32,055$ 3.5%
2005 34,272 9,192,246,000 33,146 3.9%
2006 34,306 10,144,967,000 36,284 3.0%
2007 34,759 10,913,785,000 38,553 3.4%
2008 35,500 11,744,572,000 40,711 4.9%
2009 37,653 11,937,436,000 41,621 6.2%
2010 38,057 12,257,208,000 41,876 7.1%
2011 37,247 12,848,571,000 43,444 6.8%
2012 37,839 13,651,835,000 45,433 5.0%
2013 38,369 - - 4.5%
Sources:Population information was provided from past financial reports. Unemployment rates,
personal income and per capita personal income were obtained from the U.S.
Department of Labor Bureau of Labor Statistics website or the Texas Workforce
Commission website.
Note:Personal Income and Per Capita Personal Income numbers are for Galveston County;
2013 numbers were not available.
91
Table 15
City of Friendswood
Principal Employers
Current Year and Seven Years Ago
(Unaudited)
Percentage Percentage
Estimated of Total City Estimated of Total City
Employer Employees Workforce Employees Workforce
Friendswood ISD 698 27.15% 675 34.84%
Kroger 413 16.06% 234 12.07%
HEB 370 14.39% 275 14.19%
City of Friendswood 233 9.06% 222 11.46%
Clear Creek ISD 168 6.53%2 - 0.00%1
Friendship Haven Nursing Home 140 5.45% 135 6.97%
Friendswood Healthcare (Autumn Hills) 85 3.31% 90 4.64%
McDonalds 69 2.68% 33 1.70%
U.S. Post Office 58 2.26% 70 3.61%
Emeritus 69 2.68% - 0.00%
UTMB 59 2.29% - 0.00%1
Luna's Mexican Restaurant 45 1.75% 40 2.06%
Timber Creek Golf Club 45 1.75% 41 2.12%
Sonic 50 1.94% 49 2.53%
Perry & Sons Market and Grille 35 1.36% - 0.00%1
Village on the Park 34 1.32% 34 1.75%
Gary Greene Realtors - 0.00%3 40 2.06%
Total 2,571 100.00% 1,938 100.00%
Source: City Economic Development Division
Note: Principal Employer data was not available for fiscal year 2003 - 2005.
1 Data was not available for fiscal year 2006.
2 Includes Wedgewood Elementary and Brookside Intermediate.
3 Data was not available for fiscal year 2013.
20062013
92
Table 16
City of Friendswood
Full-time Equivalent City Government Employees by Function/Program
Last Ten Fiscal Years
(Unaudited)
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Function/Program
General Government:
City Manager 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 4.65 4.15
City Secretary 4.00 4.00 4.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
Administrative Services 22.72 24.44 25.81 26.19 27.20 27.20 27.20 27.20 28.20 28.20
Public Safety:
Police 67.40 70.07 72.06 81.41 83.90 79.40 79.40 80.40 80.40 81.40
Fire marshall and fire 12.85 12.85 4.50 6.11 6.10 6.10 6.10 6.10 6.10 6.10
Public Works: - - - - - - 19.00 19.00 19.33 20.33
Community Development: - - - - - - 17.70 17.70 16.89 16.89
Community Development and
Public Works: 34.00 34.00 35.00 36.00 36.00 36.70 - - - -
Community Services: 30.43 30.43 31.01 32.18 32.20 32.20 18.95 18.95 19.28 19.20
Library - - - - - - 14.72 14.72 14.72 14.37
Water: 9.00 9.00 9.00 9.00 9.00 10.30 10.30 10.30 10.30 9.30
Sewer: 7.00 7.00 8.00 8.00 8.00 9.00 9.00 9.00 9.00 9.00
Total City Employees: 192.90 197.29 194.88 209.39 212.90 211.40 212.87 213.87 213.87 213.94
Source: City of Friendswood Budget Documents
Notes: Beginning with fiscal year 2006, the fulltime equivalent for Fire Marshal and Fire include only the Fire Marshal Department. The City
has a contract with the Friendswood Volunteer Fire Department and there are no employees paid directly by the City.
From 2004 - 2009, public works and community development were combined.
In 2010 - 2013, they are shown as two separate departments.
Beginning in fiscal year 2010, the fulltime equivalent for Library is shown separate from Community Services. In previous years, the fulltime
equivalent is included with Community Services.
Full-time Equivalent Employees as of September 30
93 Table 17City of FriendswoodOperating Indicators by Function/ProgramLast Ten Fiscal Years(Unaudited)2004200520062007200820092010201120122013Function/ProgramGeneral Government:Building permits issued 851 1,129 882 975 872 1,189 984 1,222 1,317 1,469 Building inspections conducted 10,051 12,641 12,264 11,135 11,472 6,673 8,744 9,514 10,486 11,470 Police:Physical arrests 1,189 1,041 1,804 1,923 1,868 1,794 2,002 1,962 1,885 1,601 Parking violations 45 22 30 34 46 33 27 82 61 107 Traffic violations 11,196 12,053 12,623 11,374 7,897 7,821 7,000 7,291 6,518 5,718 Fire Marshall:Inspections 812 731 668 1,300 1,312 1,653 1,509 1,444 1,616 1,673 Fire:Emergency responses 2,395 2,453 2,497 2,723 2,794 2,950 2,737 2,818 2,975 2,993 Fires extinguished 82 93 75 74 118 102 110 108 86 86 Parks and Recreation:Recreation participants NA NA NA NA 7,547 12,283 13,792 13,894 16,068 18,607 Facility reservations NA NA NA 1,115 1,065 1,727 1,451 503 493 686 Library:Volumes in collection 88,737 90,163 92,633 93,028 96,100 94,512 99,880 97,622 125,251 133,865 1 Total volumes borrowed 280,520 281,060 300,241 308,718 323,323 350,892 356,787 349,223 355,447 367,948 Water:New connections 388 208 209 289 202 46 160 173 185 189 Water main breaks 54 76 105 44 73 73 64 516 112 193 Average daily consumption 3,957 4,094 3,886 3,472 4,217 4,209 3,408 6,406 4,584 5,577 (thousands of gallons)Peak daily consumption 10,718 9,935 7,030 6,358 11,004 7,187 7,606 13,698 10,896 11,505 Sewer:Average daily sewage treatment 3,258 3,081 3,064 3,425 3,120 2,950 3,465 2,787 2,968 2,956 (thousands of gallons)Maximum daily flow 8,563 10,587 10,484 10,484 7,520 9,537 11,393 10,833 10,777 10,401 (thousands of gallons)Source: Various City departments and prior year CAFRsNA - Information is not available.1Beginning in FY 2012, total volumes count also includes all electronic materials.Fiscal Year Fiscal Year
94 Table 18City of FriendswoodCapital Asset Statistics by Function/ProgramLast Ten Fiscal Years(Unaudited)2004 2005 2006 2007 2008 2009 2010 2011 2012 2013Function/ProgramPoliceStations 1111111111Patrol units 15 16 18 28 27 24 26 26 25 26FireStations 3333344444Public WorksStreets - paved (miles) 157 157 179 150 159 160 161 162 164 165Streets - unpaved (miles) 4410222222Traffic signals 3 333333333Parks and RecreationAcreage 189 189 189 189 189 189 189 189 189 189Parks 8888888888Swimming pool 1111111111Tennis courts 4444444444Library 1 111111111WaterWater mains (miles) 160 165 179 180 180 181 183 184 186 187Fire hydrants 1,250 1,250 1,250 1,275 1,275 1,275 1,305 1,324 1,588 1,608Connections 10,988 11,196 11,405 11,748 11,982 12,057 12,231 12,476 12,711 12,929Storage capacity 5,993 5,993 5,993 5,993 5,993 5,993 5,993 7,500 7,500 7,500(thousands of gallons)SewerSanitary sewers (miles) 160 165 153 155 155 156 158 159 162 163Connections 10,331 10,537 10,682 10,902 11,115 11,256 11,404 11,563 11,828 12,072Storm sewers (miles) 92 92 92 95 95 96 98 99 100 100Treatment capacity 4,850 4,850 4,850 4,850 4,850 4,850 4,850 4,850 4,850 4,850(thousands of gallons)Source: Various City departments and prior year CAFRsFiscal Year